law discussion question and need a sample draft to help me learn.
Ashraf Ghani completed a diploma in Cooking and Baking at William Anguish College. Immediately
after graduating he set up his own bakery in Dandenong that he called “Kabul Breads”. A few months
later, as things were going well, Ashraf decided to expand his business. Around that time, he met an
old Afghani friend, Shah Masood, who was an accountant and a financial adviser. They discussed
Ashraf’s expansion plans, and Shah quickly offered to review his financial situation and to prepare a
business plan. As Ashraf was financially ignorant and needed expert guidance, he accepted Shah’s
offer and gave his financial records.
Shah prepared a financial report and advised Ashraf that he was in a sound financial position, and that
he could expand his business. He recommended that Ashraf borrow money in order to set up a new
bakery on fashionable Lygon Street, in Carlton (a suburb of Melbourne). Ashraf trusted his friend and
decided to act on the advice. He borrowed $500,000 from “For You Only”, a small credit union located
in Springvale that provides loan and overdraft facilities. “For You Only” used the financial report
prepared by Shah to offer a loan to Ashraf. Ashraf signed a five-year lease.
Soon after opening his new shop, Ashraf realised that people who visit the Lygon Street area generally
only buy traditional Italian food and bread – there was no market for Afghani bread. Ashraf came under
financial stress, and blamed Shah for his situation. Shah admitted that he had not adequately factored
in Ashraf’s pre-existing debts, and had underestimated the significant costs associated with setting up
the new business. Shah advised Ashraf to terminate the lease and inform “For You Only” that he would
be unable to repay the loan. “For You Only” is faced with significant losses.
(a) Advise Ashraf about his prospects of success in an action against Shah in the tort of
negligence. Refer to relevant cases and statutes. (14 marks)
(Approximately 28 minutes of writing time)
(b) Does Shah owe “For You Only” a duty of care? Refer to relevant cases. (6 marks)