COURSE WORK ASSESSMENT:
(a) Hatchet & Co, an accounting firm, in their audit of the accounts of Giant plc, stated Giant’s profits to be £10 million. This caused a sharp rise in the share value of Giant. On learning of this news, the directors of Giant decided to launch the company into a new venture costing £2 million.
Henry, a shareholder of Giant, on seeing the accounts, bought a further 10,000 shares. He told his friend Gloria about his investment. She then purchased 1000 Giant shares.
It was later revealed that Giant’s accounts were grossly overstated by Hatchet & Co. Giant’s share value fell drastically after it was shown that the company were really making a loss. Henry and Gloria have lost the money that they invested in the company.
Advise Hatchet & Co of their liability, if any in the above situation.
(b) Critically consider the effect of a misrepresentation made in negotiations prior to a contract being made.
LENGTH: 2000 words maximum.