M wrote to A (Accountants), asking if he could rely on the firm's audit report of B Ltd. M told A (Accountants), confidentially, that he was considering making a take-over bid for B Ltd. A (Accountants) advised M that he could rely on the report. As a result, M relied on the report and purchased the entire share capital of B Ltd. M has now discovered that he has paid considerably more for the shares than they were worth, as the company's stock had been negligently over-valued in the audit report.
Which of the following is correct?
- M cannot recover compensation from A (Accountants) in tort, as they only owe a contractual duty to B Ltd.
- M can sue A (Accountants) in the tort of negligence as they knew that M intended to rely on their report and the purpose for which he intended to use it.
- M cannot hold A (Accountants) responsible, as he did not pay for their advice.
- M can recover damages from A (Accountants) for breach of contract.