Which of the following defenses would be most effective for a CPA accused of common law fraud by a client?

Answer options:

The client was contributorily negligent.

There was no privity of contract.

The CPA had a good faith belief that the misrepresentation was true.

The misrepresentation was not material.

How to approach this question

Recall the elements of fraud (MAIDS): Material misrepresentation, Actual reliance, Intent to induce reliance, Damages, Scienter. Lack of Scienter (intent) defeats fraud.

Full Answer

C.The CPA had a good faith belief that the misrepresentation was true.✓ Correct

To prove fraud, the plaintiff must show Scienter (intent to deceive or reckless disregard for the truth). If the CPA acted in good faith, Scienter is missing.

Common mistakes

Confusing defenses for negligence (like contributory negligence) with defenses for fraud.

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