Business Law | Problem solving Question
Problem-solving Question 1 – Week 9 Workshop Assessment
Students are to electronically submit their answer to the workshop problem for assessment (weighting 15%). The assessment criteria and submission point can be found under “Assessment” folder in Learning @ Griffith.
Due Date for submission is Tuesday, 4th October, 2016 at 1.00 pm.
Workshop 9 Problem-solving Question
Jenny has recently retired. She receives a golden handshake of $500,000 from her employer. Jenny wants to invest the $500,000 in real estate. Angie, a real estate agent contacts her with a proposal to invest in the property development of a small island in Moreton Bay. Angie assures Jenny that if she invests $500,000 into the “Sure-thing Property Development Pty Ltd” (Sure-thing) she will triple her investment in six months. Jenny contacts George, her financial planner, asking for his advice.
George tells Jenny that he would need to conduct a due diligence review of the company before he could make any recommendation about investing. The due diligence report would cost $12,000 and take approximately a month to complete. Jenny has neither the time, nor the money to wait. She asks her friend, Richard, who is studying accounting and financial planning at Griffith University to look at the proposed investment. Richard looks at the financial statements of Sure-thing and tells Jenny it is a good investment. Richard does NOT charge Jenny for his services as they are friends. Unfortunately, Richard has misread the accounts of Surething, which is almost insolvent. Jenny invests her money and Surething immediately goes into liquidation and Jenny loses $500,000. Jenny discovers that many financial planners/ real estate property developers were aware of the poor financial position of the company and warnings had been published in several financial/ accounting journals and property magazines that Surething was in financial trouble.
- Discuss whether Jenny has any claim for damages against either Angie or Richard?Explain your answer fully making reference to appropriate case law and relevant sections of the Civil Liability Act 2003 (Qld) and s18 Australian Consumer Law.
- Can Angie or Richard raise any defences to the negligence action initiated by Jenny? Explain your answer fully making reference to appropriate case law and relevant sections of the Civil Liability Act 2003 (Qld).
(Total Marks for this question 15)
Report an abuse for product Business Law | Problem solving Question
There are a number of issues that should be addressed in this case. These include:
- Considering that Richard is a student who does not charge Jenny for his services, can Richard be considered a professional real estate agent? And does he owe duty of care to Jenny?
- Considering that information about the imminent collapse of Sure-thing was widely spread, did fail in her duty of care to warn Jenny?
- Did Angie and Richard engage in deception and misleading?
- In consideration of the above, can Jenny seek damages from Richard and Angie?
According to Division 5, s. 20 of the Civil Liability Act 2003 (Qld), a professional is a personal who is practicing a profession. S. 22 of the same act stipulate that a professional does not breach duty of care is the advice given is widely accepted by the professionals opinion in the field at the time although this does not apply in failure to give a warning, advice or other information. A defendant is considered not to have a duty of care to the plaintiff to warn of an obvious risk (s. 15(1) of the Civil Liability Act 2003 (Qld), but this does not apply if the plaintiff had sought informationor advise about the risk (s.15 (2)(a)), defendant is required by law to warn plaintiff (b), and lastly, defendant is a professional (c).A person is therefore considered not to have breached duty of care against a risk in line with s.
Civil Liability Act 2003 (Qld), S. 20
 Ibid, S. 15