Question

Inspired by the myriad of cooking shows on television, Dawn is interested in investing a sum of money she has recently inherited in a restaurant and therefore seeks the advice of Global Domination Advisors Pty Ltd. Angel is appointed as her advisor and after some discussion, Angel recommends she invest in 'The Witches Cauldron', assuring Dawn that the restaurant has been very successful and that its future is even brighter - investment monies are now being sought so it can franchise and that an excellent profit within the next year is assured. Dawn takes Angel's advice, but she wants extra funds to invest so she will receive a higher return. Dawn approaches her neighbour, Tara, whom she has befriended. Tara suffers from a mild mental disability and depression and does not cope well in the wider community, particularly since the death of her mother. Tara relies on Dawn for advice and support. Dawn asks Tara to lend her $20,000 so she can make it into $40,000 for her. Tara asks if this will make Dawn happy, when Dawn says yes, she gives her the money, and Dawn asks her to sign a document to the effect that Tara has loaned the money to Dawn interest free, to be repaid if and when the restaurant venture succeeds to Dawn's satisfaction. Sadly, after 6 months, The Witches Cauldron is losing money and Dawn has lost most of her investment monies. Dawn discovers that Angel gave his advice relying on financial information which was out of date and incorrect. He also ignored the fact that the restaurant was about to be prosecuted for breach of their license conditions. Dawn is furious. Tara's niece has now also discovered Dawn's behaviour and insists that she repay Tara, claiming that the loan agreement is not valid.

Advise Dawn and Tara if there is any action and against whom they may take it, giving reasons for your answers.

Answer 1

Dawn took the advise from Angel who works for a company specialised in this field . So Dawn can take action against Angel if she can prove that Angel gave her the advise based on financial information which is out of date and incorrect and also ignored the fact that the restaurant was about to be prosecuted. It is the duty of Angel to consider these things before giving advise to the clients and hence the company whom Angel represents must take the responsibility of the loss incured by Dawn. Tara can sue Dawn for the money because Tara is not in right mind to accept the offer made by Dawn at the time of signing the contract which means Dawn manipulated her for the money and hence the agreement would be invalid.