Write explanatory notes on Andrews V. Mockford (1896)

This case is authority for the proposition that if a prospectus is intended to
influence both original and subsequent allotees, persons who deal with the shares after the original allotment can rely on the prospectus to avoid the contract of allotment of shares. Such a prospectus is not deemed to have outlived its usefulness.

The defendants had formed a sham company for the purpose of mining gold in South Africa. Very few persons applied for shares. Subsequently the defendants fraudulently caused to be published in the Financial News, a telegram to the effect that the Company had struck gold. The plaintiff applied for and was allotted 50 shares. He sought to recover damages for fraudulent misrepresentation. It was held that the defendants were liable since the prospectus had not become exhausted the time the plaintiff bought shares.

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