Ford & Co., CPAs, issued an unqualified opinion on Owens Corp.’s financial statements. Relying on these financial statements, Century Bank lent Owens $750,000. Ford was unaware that Century would receive a copy of the financial statements or that Owens would use them to obtain a loan. Owens defaulted on the loan.

To succeed in a common law fraud action against Ford, Century must prove, in addition to other elements, that Century was

  1. Free from contributory negligence.
  2. In privity of contract with Ford.
  3. Justified in relying on the financial statements.
  4. In privity of contract with Owens.