Under the Ultramares doctrine regarding a CPA's liability for negligence to third parties, which of the following parties would most likely be able to recover damages from a CPA who negligently prepared a financial statement?

Answer options:

A third party in privity of contract with the CPA.

Any foreseen third party who relied on the statement.

Any reasonably foreseeable third party who relied on the statement.

A third party who relied on the statement, regardless of whether the CPA knew of them.

How to approach this question

Ultramares = Strict Privity (or very close to it). Restatement = Foreseen Class. Rosenblum = Foreseeable.

Full Answer

A.A third party in privity of contract with the CPA.✓ Correct

The Ultramares doctrine generally limits a CPA's liability for ordinary negligence to parties in privity of contract (the client) and intended third-party beneficiaries specifically known to the CPA. It rejects liability to a general class of foreseen or foreseeable third parties for mere negligence (though liability for fraud extends to all).

Common mistakes

Confusing Ultramares with the Restatement of Torts standard.

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