Ailing Company's liabilities exceed its assets. Ailing hires Brad, an accountant, to certify a balance sheet showing a positive net worth. Credit Bank relies on the balance sheet to make a loan to Ailing. The firm defaults on the loan. Under the Ultramares rule, Brad is most likely not liable because he
A) did not owe a duty of care to any third party.
B) is not responsible for his client's finances.
C) finished his work before Ailing's loan and default.
D) was not in privity with the bank.

Question

Ailing Company's liabilities exceed its assets. Ailing hires Brad, an accountant, to certify a balance sheet showing a positive net worth. Credit Bank relies on the balance sheet to make a loan to Ailing. The firm defaults on the loan. Under the Ultramares rule, Brad is most likely not liable because he​
A) ​did not owe a duty of care to any third party.
B) ​is not responsible for his client's finances.
C) ​finished his work before Ailing's loan and default.
D) ​was not in privity with the bank.

Quizplus · Accepted Answer

Under the Ultramares rule, an accountant is generally not liable to third parties for negligence unless there is privity of contract or a relationship akin to privity. Since Brad was not in privity with the bank, he is most likely not liable.

Ailing Company's Liabilities Exceed Its Assets