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Risky business (2)

Peter Maguire considers potential liability to non-clients in transactional work

11 April 2003

One area of risk solicitors face in an increasingly demanding environment is third party claims. This article looks at issues which may arise in transactional work and suggests how they may be addressed. Identifying the client and other recipients of the advice A solicitor may in certain circumstances owe a duty of care to non-clients, usually where it appears the third party is reasonably relying upon the advice or information provided by the solicitor. Hence, the prudent solicitor will know at every stage of a transaction:
  •  The identity of the client – all transactions involve parties with differing interests and these may include the shareholders, the directors, the company and the financiers;
  •  Whether the client is passing on the advice to third parties who have an interest in the transaction – in that event, it is necessary to identify and clarify the existence and scope of any duty of care which may arise; and
  •  Whether another party...
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