Reference no: EM133390008

Question: Doris owns a designer clothes shop. The business is struggling financially and has very few customers. Doris owes money to a number of suppliers and is also at the limit of her overdraft facility with her bank. She approaches Edie to see if Edie would be interested in purchasing the business. Edie, who owns a café and a gift shop next door, is uncertain. In an attempt to secure the sale, Doris informs Edie that the shop is a thriving business which generates a healthy profit of £75,000 which is untrue. Doris also fails to disclose that she has debts and that some of her essential suppliers are refusing to send stock until the debts are paid. Doris tells Edie about the profit to secure a sale in order to pay off her extended overdraft. She records the remainder of the debts into her accounts but in the wrong place so they are effectively 'hidden' from obvious view.

Edie agrees to purchase the business and asks whether the electronic cash register and computer included in the sale have extended warranties. Doris tells Edie that all of them have warranties that are good for another year. The computer does have a valid extended warranty but the warranty on the cash till has expired. The expiry dates of the warranties are clearly indicated on the documentation accompanying each machine.

Doris also tells Edie that she will easily be able to secure a new contract for the supply of EasyLite, a new designer brand of sports leggings and tops. In fact, EasyLite have strict brand guidelines about who they supply clothes to and a number of criteria must be met.

Advise Edie as to any action she can take and consider which remedies may apply.