(Based on Australia's Corporate Law)

Question1

Mike, an inexperienced investor, asks an acquaintance Sarah for some investment advice. Sarah has often boasted to Mike how she has made a fortune because she makes smart decisions about buying and selling the right shares at the right time. Sarah told Mike that a company called "Success Guaranteed" is floating its shares and the share price is bound to triple within a year. Mike was very excited by this prospect and invested $100,000 into "Success Guaranteed".

A year later, the company has gone into liquidation. Mike asks you if he has any common law (non-statutory) rights to sue Sarah.

Required

Advise Mike and support your answer with relevant common law.

Question 2

Tina and Aristotle Papadopoulos are an elderly couple who immigrated to Australia from Greece in the 1950s. They both worked very hard in their family fruit shop business in Oakleigh. Tina and Aristotle want to spend more time with their grandchildren. They are now ready to retire and have sold their fruit shop for a nice profit of$750,000.

Tina and Aristotle want to invest this money. They make an appointment to see William a financial adviser who advises clients on a variety of financial products and investments.

William recommends they invest the bulk of their money in Big Dreams Ltd by acquiring shares. Tina and Aristotle are hesitant because they have never purchased shares before. William convinces them it's a good investment and claims they will receive double their investment in 18 months.

In fact, Big Dreams Ltd is performing poorly financially and William has no basis for making these claims.

William also convinces Tina and Aristotle to take out life insurance with a particular company even though Tina and Aristotle specifically say they do not think they need this.William is keen to sign them up because he receives a $400 Coles gift card for every client he signs up.

William prepares all of the necessary paperwork and obtains the life insurance policy for Tina and Aristotle. William does not give the couple an opportunity to read the paperwork because he does not believe either Tina or Aristotle would understand it anyway.

It turns out the life insurance policy is very expensive and the share investment falls through.

Required

Advise Tina and Aristotle whether William has breached the common law, the ASIC Act or the Corporations Act. Refer to remedies and defences where appropriate.

Question 3

Bruce is sitting in his accountant's office, listening to professional advice from Sally, who has been doing Bruce's tax returns for years. Suddenly, Bruce's chair wobbles a bit, and Sally says "Sorry about that! I have been meaning to fix that. Please be careful." Bruce tries not to move in his seat as Sally mentions Bruce's shareholdings. Sally comments on how much money Bruce has made from his shares, and she says "Gee! Imagine if you had all of your money invested on the Australian Stock Exchange! Perhaps you could choose to invest in one of our four major banks! You could retire tomorrow!"

This was fabulous news, and Bruce clapped his hands with delight. Unfortunately at that moment, his chair collapsed and he came crashing down, knocking his head on Sally's desk. Sally was very apologetic and arranged for him to be driven to the local surgery. Whilst in the waiting room of the doctors, Bruce called his broker and invested all his life savings into 'Which Bank'.

Due to experiencing concussion, Bruce has not been able to work forthreeweeks and he does not have any more sick leave. Also, due to negative findings from a financial inquiry, which all members of the financial services sector were well aware of, his bank shares plummeted and Bruce lost most of his life savings. Within a month, Bruce is penniless and still has a sore head.

Required:

Bruce comes to you for advice. Is there any legal action he can take against Sally?