3rd party liability

1. Under the position taken by a majority of the courts, to which third parties will an accountant who negligently prepares a client's financial report be liable?

 a. Only those third parties in privity of contract with the accountant.

 b. All third parties who relied on the report and sustained injury.

 c. Any foreseen or known third party who relied on the report.

 d. Any third party whose reliance on the report was reasonably foreseeable.

Choice "c" is correct. Under the majority position an accountant is liable for negligence only to third parties whom the accountant knows or should foresee will be relying on the accountant's work.