The term "privity" is an example of the relationship between auditor and plaintiff.

Question

Quizplus · Accepted Answer

The term "privity" refers to a legal relationship between two parties that allows one party to sue the other for breach of contract or other legal issues. In the context of auditing, privity refers to the direct relationship between an auditor and their client, but not between the auditor and other parties who may be harmed by the client's actions, such as investors or creditors. This lack of privity can limit the ability of these third parties to sue auditors for damages caused by the client's misconduct. However, in some cases, courts have allowed third parties to sue auditors under certain circumstances, even without privity.

The Term "Privity" Is an Example of the Relationship Between