Part Inc. $($PI$)$ sells electronic components to small and large retailers. PI sought a loan from the General Bank $($GB$).$ GB had previously extended $$40,000$ credit to PI but refused to lend any additional money without obtaining copies of PI$$s audited financial statements.

PI contacted the CPA firm of Albert & Einstein to perform the audit. In arranging for the audit, PI clearly indicated that its purpose was to satisfy the Bank as to the corporation$$s sound financial condition and to obtain an additional loan of $$35,000.$ Albert & Einstein accepted the engagement, performed the audit in a negligent manner, and rendered an unqualified opinion. If the audit would have been conducted according to Canadian Auditing Standards the financial statements would have been found to contain a material misstatement and be misleading.

PI submitted the audited financial statements to GB and obtained an additional loan of $$10,000.$ GB refused to lend more than that amount. As a result PI took the audited financial statements to the Western Bank who agreed to loan the company $$25,000.$

PI is now in bankruptcy, and GB seeks to collect from Albert & Einstein the $$50,000$ it loaned to PI The Western Bank is also seeking to collect from Albert & Einstein the $$25,000$ it loaned to PI$.$

Required:

Will GB succeed in a law suit against Albert & Einstein for the $$50,000?$ If so what must they prove? Fully explain your answer.

Will the Western Bank succeed in a law suit against Albert & Einstein for the $$25,000?$

Provide an explanation to your response.