In a common law action against auditors,lack of privity is a viable defense if the plaintiff
A) is the client's creditor who sues auditors for ordinary negligence.
B) can prove gross negligence by auditors that amounts to a reckless disregard for the truth.
C) is the auditors' client.
D) bases the action upon fraud.

Question

Quizplus · Accepted Answer

Lack of privity is a viable defense against a client's creditor who sues auditors for ordinary negligence because the creditor is not in a direct contractual relationship with the auditors. However, if the plaintiff can prove gross negligence by the auditors amounting to reckless disregard for the truth, lack of privity may not be a viable defense. Lack of privity is not a viable defense for the auditors' client or for an action based upon fraud.

In a Common Law Action Against Auditors,lack of Privity Is