How this scenario relates to an area of law taught in Introduction to Business Law
The tort of negligence is the area of law which this scenario relates to. LMS has threatened to seek legal action against Chuan & Associates to recover damages for the harm suffered because of the approval of financial statements which had material misstatements by the audit firm. Everything 4 Less Limited (E4L) acquisition was a decision based on the information contained in those financial statements and LMS suffered financial loss by relying on them. The statements had overstated the value of the company’s inventories, and this had increased the value of the company during the bid and subsequent acquisition.
The legally important facts in the scenario
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