Halbeck,LLC was negligent in its audit of E-treme,Inc.Unbeknownst to Halbeck,E-treme used the financial statements to secure a loan from Great State Bank.Under the foreseeable doctrine,Halbeck will be liable to Great State Bank for its losses on the loan.

Question

Quizplus · Accepted Answer

Under the foreseeable doctrine, Halbeck will be held liable for its negligence in the audit, and any foreseeable parties who relied on the financial statements and suffered losses as a result. Great State Bank, as a lender who relied on the financial statements to grant a loan to E-treme, falls under this category of foreseeable parties, and therefore Halbeck will be liable to Great State Bank for its losses on the loan.

Halbeck,LLC Was Negligent in Its Audit of E-Treme,Inc