Clark is a financial adviser who advises clients about their share investments, and he

has particular expertise in the area of rare earth minerals companies. Rare earth

minerals are used to manufacture computer chips. With the increaging computer

technology going into consumer products, rare earth minerals are a hot commodity.

Clark meets Lois, who is a radio-reporter for a major radio station. She reports on the

latest technology, especially related to scarce minerals. Lois quizzes Clark about rare

earth minerals, and Clark explains how "demand will outstrip supply for at least the

next 20 years and share prices will go sky-high. Just look at the price of Krypton Rare

Earth Minerals Ltd, which rose from $0.02 to $20 per share in just one month". Clark

says to Lois "I could give you some advice if you want to invest in shares". Lois tells

Clark "No thanks. I am just reporting the information on my radio show."

Lois borrows $25,000 and invests it in Krypton Rare Earth Minerals Ltd shares

Lois borrows $25,000 and invests it in Krypton Rare Earth Minerals Ltd shares

without telling Clark. Lois also tells her editor, Bobby, who also invests in Krypton

shares.

Unfortunately, Krypton Rare Earth Minerals Ltd goes into liquidaticn shortly after

and shareholders, including Lois and Bobby, lose their entire investments.

Part A

Lois is very upset.

- Advise her whether Clark owes her a duty of care in relation to negligent

misstatement. Do not discuss other elements of negligence.

- Explain in detail how the court will determine whether Clark owes Lois a duty of care.

Part B

Bobby is also very upset.

- Advise him whether Clark owes him a duty of care in relation to negligent

misstatement. Do not discuss other elements of negligence.

- Explain in detail how the court will determine whether Clark owes Bobby a duty of

care.

(For the answers to all these parts, refer to relevant court cases, legal principles and

legislation wherever applicable)