(a) The Mighty Mouse Trap Company has just started to export mouse traps to the US. The advertising slogan for the mouse traps is, ‘A girl's best friend.' The Utopian Liberation Movement is claiming EUR 800,000 from the company because the advertising slogan allegedly compromises the dignity of women. The company's legal representatives are of the opinion that the success of the claim will depend on the judge, who presides over the case.
They estimate, however, that there is a 70 per cent probability that the claim will be thrown out and a 30 percent chance that it will succeed.
(b) Boss Ltd specialises in the design and manufacture of an exclusive sports car. During the current financial year, 90 sports cars were produced and sold. During the testing of the sports car, a serious defect was found in its steering mechanism. All 90 customers were informed by way of a letter of the defect and were required to return their cars to have the defect repaired at no charge. The estimated cost of the recall amounts to EUR 900,000.
Would you make any provision in these two situations? Why?