- 4 Marks
Question
Femi, an entrepreneur, and his friend Umukan, a Chartered Accountant, are members of the same social club. Femi invited Emike to invest in sachet water business. Emike sought the professional advice of Umukan and paid him a fee for the advice. Umukan informed Emike that Femi’s business was doing well. Emike invested in the business based on Umukan’s professional advice and eventually suffered a loss of ₦350,000. Emike has come to you for advice.
Required:
Advise Emike on his chances of succeeding in a legal action he intends to institute against Umukan.
Answer
Emike may have a valid claim for professional negligence or misrepresentation against Umukan. Since Umukan provided professional advice for a fee, there was a duty of care owed to Emike. If it can be established that Umukan did not perform due diligence or misrepresented the facts regarding the business’s performance, Emike could claim damages for the loss incurred. However, Emike must prove that the loss was directly caused by relying on Umukan’s advice and that Umukan breached his duty of care by giving incorrect or misleading information.
- Tags: Investment advice, Legal Action, Professional Negligence
- Level: Level 1
- Topic: Law of Tort
- Series: MAY 2016
- Uploader: Kwame Aikins