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
- Free from contributory negligence.
- In privity of contract with Ford.
- Justified in relying on the financial statements.
- In privity of contract with Owens.