Carbon Company's liabilities exceed its assets. The firm hires Dobie, an accountant, to certify a balance sheet showing a positive net worth. Equity Bank relies on the balance sheet to make a loan to Carbon. The firm defaults. Under the Ultramares rule, Dobie is most likely not liable because he

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Under the Ultramares rule, an accountant (like Dobie) is typically not held liable to third parties (such as Equity Bank) for negligence in preparing financial statements unless there is privity of contract, meaning a direct contractual relationship between the parties. Since Dobie was hired by Carbon Company and not directly by Equity Bank, there is no privity of contract between Dobie and the bank.

Carbon Company's Liabilities Exceed Its Assets