When the privity rule is applied, a bank lending money to the client of an accountant cannot sue the accountant for malpractice.

Question

Quizplus · Accepted Answer

The privity rule generally prohibits a third-party from suing a professional (such as an accountant) who has provided services to another party (such as a client). Therefore, if a bank lent money to a client of an accountant and suffered losses due to the accountant's malpractice, the bank would not be able to sue the accountant under the privity rule.

When the Privity Rule Is Applied, a Bank Lending Money