-This problem is based on civil liability in respect of prospectuses.
-In this case, the prospectus of Tamaquin Ltd contained a false statement in that the patent had not been registered. However, for the company or its officers to be held liable it must be proven that the statement:
- Was false in material particular
- Was more than mere sales talk or puff o Was one of fact not opinion
- Was in fact made by the company or its officers
- Was intended to be acted upon by the investors e.g. Allan or Betty.
- Influenced the party?s decision to apply for the shares.
- It is important to note that the issue was over-subscribed which means that the prospectus became exhausted and persons who bought the shares at the stock exchange cannot purport to hold the company liable on the basis of the prospectus.
- My advise to Allan is that he has no action against the company or its officers in that he did not rely on the prospectus to purchase the shares.
-Betty has no action against the company or its officers as she bought the shares at the stock exchange by which time the prospectus had become exhausted. My advise isconsistent with the decision in Peek V. Guvney where it was held that the plaintiff could not base his action on the prospectus as it had been exhausted.
- Charles cannot sue the company or its officer in that he did not read the prospectus and the report of the interview is not a prospectus. My advise is based on the decision in Peek V. Guvney.
- David has no actionable claim against the company or its officers in that the company is not liable to investors when the value of its shares fall due to speculators. In this case it is evident that the drop in the value of the company's shares is not based on any of the fundamentals.
marto answered the question on February 6, 2019 at 11:32
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