Mary and Frederick have never banked with the Loans R Us bank but they have several loans with the Savings Bank. The bank manager at Loans R Us tells Mary and Frederick that they will need to produce evidence of their ability to pay their loans to the Savings Bank so that he can assess whether his bank will lend them the money. Mary and Frederick obtain a letter from Savings Bank which states that it is confident that Mary and Frederick would be able to pay back any mortgage with Loans R Us based on their past credit history with Savings Bank.

However the banker from Savings Bank was new ND misread the file not noticing that Mary and Frederick had defaulted several times on their loans. As a result Loans R Us lent Mary and Frederick $500,000 to purchase the property. Mary and Frederick also write to the local roads authority to investigate whether there are any proposals that may affect the property. The roads authority replies that there are no proposals to build roads in that area.

This is not true: in fact the roads authority has approved the construction of a major highway which will run through the middle of the property. As a result Mary and Frederick buy the property and draw up plans to build their dream mom. Six months after buying the property Mary and Frederick discover the roads authority’s plans to build a highway through their property. Apparently the highway had been approved a couple of years ago but construction was delayed. To make matters worse, Mary and Frederick cannot make their mortgage repayments and default on the loan with Loans R Us.

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Loans R Us contact the Savings Bank which informs them that the advice they were given was incorrect because Mary and Frederick had missed several loan repayments and were likely to be sued by the Savings Bank to recover those repayments. Loans R Us state hat they would never have lent Mary and Frederick the money to buy the house had they known their true financial situation. (a) Can Mary and Frederick bring an action in negligence against the roads authority? (b) Can Loans R Us sue the Savings Bank for their incorrect advice? Use cases to support your answer. 5 marks 2. William wants to sell his car so that he can buy a plane ticket to travel to Switzerland. He decides to put an advertisement in the local paper. On 28 February he receives a phone call from Kate who says that she would like to buy the car. A week later Kate rings him again saying that she would like to buy the AR so William tells her that the price is $1 0,000 in cash which would be payable by 28 March. He also tells her that he will keep the offer open to Kate for one week and that if she wants to accept that offer, she must email him by 14 March.

She tells him that she doubts that she would be able to pay the full amount by that date. Harry sees the advertisement in the paper and rings William on 10 March saying that he would like to buy the car and that he could pay cash by 15 March. William tells Harry that he is happy with that arrangement. On 13 March Kate sends an email to William saying that her cousin has loaned her the money o she will be able to buy the car and pay the full amount by 28 March. The email is not read by William until 16 March because his computer had crashed.

When William reads that email later that day, he responds by stating that he is very sorry but he has sold the car to Harry. William is concerned that he may be legally obliged to sell the car to Kate. Advise William of his legal position. 10 marks 3. Tom runs a landscaping business which recently completed work at Sarah’s property. The account was $40,000 and is due on 13 March. Sarah paid $20,000 as a deposit but recently lost her job. On 14 March she tells Tom that she cannot pay the remaining $20,000 but that she could pay $10,000 to settle the debt.


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