Bank Liability for Negligent Advice - 4392 Words

â€Å"If [a banker] undertakes to advise he must exercise reasonable care and skill in giving the advice. He is under no obligation to advise, but if he takes upon himself to do so, he will incur liability if he does so negligently.† House of Lords in Banbury v. Bank of Montreal[1] I. Introduction The issue of legal liability of banks in the provision of negligent advice is one doctrine of law that has evolved through the years. In light of current controversies hounding the UK banking sector, it is not far-fetched nay unthinkable to surmise that such act would again be subjected to closer scrutiny and for the courts to perhaps develop, clarify, and/or expand the doctrine’s reach. At the outset, are banks under a duty to†¦show more content†¦Ã¢â‚¬Å"the giving of financial advice† as one of the off-shoots in the constantly expanding role which banks play in the contemporary times. The concept of negligence is defined as â€Å"the breach of any obligation arising from the express or implied terms of a contract to take reasonable care or exercise reasonable skill in the performance of a contract, or of any common law duty to take reasonable care or exercise reasonable skill (e.g. as an agent).†[16] Considering that a banker-customer relationship is basically contractual, it is evident that where a provision for such liability is incorporated therein (albeit nil), a bank can be held legally accountable should it indeed proffer negligent advice. The contract should then be regarded as a memorial of the terms which were agreed upon by the parties, and cannot be altered under the parole evidence rule.[17] However, the current state of the law is that banks, as a general rule, are under no obligation to provide advice to their customers unless expressly asked to do so.[18] Nonetheless, even where no express request is made, a bank may be found negligent if there is a voluntary assumption of responsibility to give advice and the injured party relied on the same.[19] SuchShow MoreRelatedShould A Business Have Civil Liability For The Criminal Acts Of Its Employee?1741 Words   |  7 PagesShould a Business have civil liability for the criminal acts of its employee? Over the years, civil suits have been brought against firms because of the actions of their employees. Firms are expected to have a duty of care to select, train and supervise their employees since these employees were hired to represent them (â€Å"An Employers liability†, 2014). If a criminal act is committed by an employee, then there has been a breach of the duty of care. Many advocates of these suits have come underRead MoreTort of Negligence1524 Words   |  7 Pagesthe main reason to resulting in infringement. 4. Whether the plaintiff suffered virtual damage as a result of the breach. the bank operators have a duty of care towards the customers if they should have known about the danger around the workplace. in other words, the operators have to consider the likelihood of occurrence before suffered injury. The duty of the bank in this situation was that take such care for safety as was reasonable in the circumstances, and to protect that customers fromRead MoreNegligent Misstatement2214 Words   |  9 PagesCONTENTS Negligent misstatement refers to a representation of fact that been carelessly made, which is relied on the plaintiff to their advantages (O’Riordan, 2007, p.1). In 1964, the tort of negligent misstatement has been established and it has gained more recognition in this decades. It covers opinions and reality statements made by negligence. However, the tort had lead to certain level of floodgate concerns in the early century and today the courts are still less well embrace its liability. In theRead MoreThe Account Of Bhp Billiton And Telstra1705 Words   |  7 Pagescomplainant’s signature and falsified documentation of his employer in order to fraudulently obtain a bank loan. As defined in the Rule 4.2 of the Code of Professional Conduct, a member must act with integrity, honesty and due care, and in a manner that seeks to uphold the reputation of the profession. The obligation also extends to requiring that a member engaging in conduct, or providing advice, a report, communication or other information does so in a way which is not knowingly false, misleadingRead MoreAnalysis Of Bhp Billiton And Telstra1716 Words   |  7 PagesComplainant’s signature and falsified documentation of his employer in order to fraudulently obtain a bank loan. As defined in the Rule 4.2 of the Code of Professional Conduct, a member must act with integrity, honesty and due care, and in a manner that seeks to uphold the reputation of the profession. The obligation also extends to requiring that a member engaging in conduct, or providing advice, a report, communication or other information does so in a way which is not knowingly false, misleadingRead MoreAuditing Chapter 43561 Words   |  15 Pagesauditors to a far greater number of investors than does the Securities Act of 1933. Answer: True Difficulty: Medium 5. The precedent set by the Hochfelder v. Ernst case is generally believed to have increased auditors legal liability. Answer: False Difficulty: Hard 6. The auditors can be held liable for negligence in audits of financial statements, but not in reviews of financial statements. Answer: False Difficulty: Easy 7. The resultsRead MoreEconomic Loss6031 Words   |  25 PagesEconomic loss caused by acquiring a product that turns out to be defective 3. Economic loss is caused by reliance on negligent statements 4. Extended Hedley Byrne principle 1. Economic loss caused by damage to the property of another party (RELATIONAL ECONOMIC LOSS). This is not recoverable in English Law, with one exception (Greystoke Castle). One reason against liability is the prospect of actions by an indeterminate number of claimants (Spartan steel). If physical harm is done to the propertyRead MoreThe Accounting Firm Hatchet And Co1983 Words   |  8 Pagesthe company. Hatchet, being an Accounting firm and thus treated in the low of torts as a professional entity has a duty of care towards the public limited company Giant under the United Kingdom company law, and it could be sued for professional negligent misstatement. Hatched might also be sued by Gloria and Henry which relied on the accounts for their investments. The profit was accounted to be  £10 million while Giant was truly making losses, that drove the investments up and the director of GiantRead MoreAbstract. There Have Been More And More Claims Made By1525 Words   |  7 Pagesof  Wingecarribee Shire Council v Lehman Brothers Australia Ltd (in liq) [2012] FCA 1028 considers the breaches that Grange had breached when selling a complex financial product to sophisticated investors – the Councils. From that, the case implies the liabilities that a financial institution need to take into consideration in the providing product process. This report will identify and explain the major breaches that the Judge found had occurred in the case and indicates the obligations of a seller whenRead MoreJack Ryan Essay845 Words   |  4 Pages 9-26-13 Case 1: Jack Ryan and Palisades Produce The workplace is littered with ethical dilemmas no matter where you work. For Pacific Trust the primary ethical issues that need attention are Jack Ryan’s negligent behavior toward his work with the Palisades Produce contract. His negligence caused him to be faced with lying to his superior or taking responsibility for his mistakes. The necessity for a course of action to help Jack comes partly from the underlying issue of Stephen Wood’s misconduct