In some states, in the absence of privity, a party cannot recover from an accountant for negligence.

Question

In some states, in the absence of privity, a party cannot recover from an accountant for negligence.​

Quizplus · Accepted Answer

This statement is true. In some states, the doctrine of privity of contract applies to accountants, which means that only those who have a contractual relationship with the accountant may sue for negligence. This limits the ability of third parties who have suffered a loss due to the accountant's negligence, but who do not have a direct contractual relationship with the accountant, to recover damages. However, there are some exceptions to this rule, such as when the accountant knew or should have known that the third party was going to rely on their work.

In Some States, in the Absence of Privity, a Party