In Order to Prove a Successful Claim for Negligence Against

Essay

In order to prove a successful claim for negligence against an audit firm there has to be a duty of care which was breached by the audit firm with the result that a loss was incurred. Auditors Woody & Co were amazed to receive a negligence claim from one of their client's bankers Gurney plc who had lent money to their client, Megabuild, after the year end and subsequently lost their money when a construction project Megabuild had been involved in went badly wrong and bankrupted them. The claim said that the auditors had significantly failed to estimate the losses on the project with the result that the bank, had they known the true position, would not have lent money to Megabuild.
Gurney plc is claiming its losses from Woody & Co. What advice would you give to Woody & Co in this situation?