1/ Helen owned a 40-room hotel adjacent to a busy highway. In 2016, Dayla purchased the hotel from Helen

for $1,000,000. During the course of negotiations, Helen told Dayla that the motel earned $120,000 in

2015. During the 1st year of operations under Dayla, the hotel only earned $90,000. Dayla learned that the

hotel had only earned $119,000 in 2015 and that Helen failed to tell her that a bypass to the highway is

being planned that will redirect most of the traffic away from the front of the hotel. Dayla sued Helen for

misrepresentation.

a. What would Dayla need to prove to be successful in suing Helen for misrepresentation?

b. Is Dayla likely to be successful? Explain.

c. What remedies are available for a successful misrepresentation action?

2/ GPD Property Developers Ltd is in the business of developing real estate. It was interested in a

condominium development project but required a loan of $500,000. The bank required financial

statements as part of the loan granting process. GPD engaged the services of Aviva, an accountant to

prepare statements. GPD told Aviva the specific purpose for which the statements were being prepared

and agreed to pay $10,000 for her services. The contract between GPD and Aviva stated that Aviva's

liability for losses due to errors in the financial statements was limited to $10,000. Aviva prepared the

financial statements and the bank relied on them in making the decision to lend $500,000 to GPD. Golda, a

shareholder of GPD also used the financial statements to make a further investment of $100,000 in GPD.

Subsequently, GPD defaulted on the loan and the bank had to write it off. Also, the value of Golda's

investment fell from $100,000 to $1000. An investigation revealed that there was a serious error in the

financial statements, which Aviva should have detected. The bank and Golda sued Aviva for damages on

the basis of negligent misrepresentation.

a. What must the bank and Golda prove to be successful? (ie, set out the applicable law)

b. Are they likely to be successful? Explain.