Marquis Company's liabilities exceed its assets,but the firm's employees falsify its books to reflect a positive net worth.Marquis hires Nan & Ollie,an accounting firm,to prepare a balance sheet,which is certified to show a positive net worth.Pure Credit Corporation relies on the balance sheet to make a loan to Marquis.When the firm defaults,Pure Credit files a suit against Nan & Ollie.Under the Ultramares rule,the accounting firm is most likely

Question

Quizplus · Accepted Answer

Under the Ultramares rule, an accounting firm is only liable to third parties with whom the firm has privity of contract or a relationship so close as to approach that of privity. Nan & Ollie did not have a direct relationship with Pure Credit since they were hired by Marquis, and thus they are not liable under the Ultramares rule.

Marquis Company's Liabilities Exceed Its Assets,but the Firm's Employees Falsify