Johnson used Birkett as his stockbroker for most of his investments. Occasionally, when Johnson had spare funds, he would seek the advice of Birkett

as to investments he should make. On one suchoccasion, Birkett recommended two companies as investments with potential for profit. At the time,Birkett indicated that he personally preferred stock B over stock A and intended to purchase some shares on his own account. Johnson ignored his advice,however, and purchased stock A. During the next few weeks, stock A dropped in value as a result of unexpected political upheaval in an unstable country where the company had extensive holdings. Stock B, on the other hand, gradually increased in value during the same period. It had reached a price approximately 20 percent above what its value had been when Birkett recommended it as a possible investment. Johnson discussed his investment with Birkett, and Birkett suggested he sell stock A. Johnson did so and requested Birkett to invest the proceeds in stock B. Birkett cautioned Johnson that the stock had

already climbed in price and might not be as attractive an investment as it was some weeks earlier. Johnson, nevertheless, insisted that he buy the shares. Birkett then transferred some of his own shares to Johnson at the current market price, without disclosing the fact to Johnson. The shares almost immediately declined in value for reasons unknown to both Johnson and Birkett. A month later, Johnson discovered that the shares that he had acquired had been transferred to him by Birkett. He immediately brought an action against Birkett for the amount of his loss. Explain the nature of the claim that Johnson might make against Birkett. Indicate how the case might be decided.

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