Which of the following statements is true of accountants' liability to third parties in breach of contract and fraud cases?
A) An accountant is liable to a third party for fraud only if the accountant has committed constructive fraud.
B) An accountant is not liable to a third party for fraud as the accountant is not in privity of contract with the third party.
C) An accountant is not liable to a third party in breach of contract cases as the accountant is not in privity of contract with the third party.
D) An accountant is liable to a third party for breach of contract if the accountant willfully refuses to perform the terms of the contract.

Question

Quizplus · Accepted Answer

Accountants are generally not liable to third parties in breach of contract cases due to the lack of privity of contract between the accountant and the third party. Privity of contract is a doctrine which states that contracts are only binding on the parties that agree to them, thus typically excluding liability to third parties in breach of contract situations.

Which of the Following Statements Is True of Accountants' Liability