Accountant's Liability to Third Parties. In June 1993, Sparkomatic Corp agreed to negotiate a sale of its Kenco Engineering division to Williams Controls, Inc At the end of July, Sparkomatic asked its accountants, Parente, Randolph, Orlando, Carey & Associates, to audit Kenco's financial statements for the previous three years and to certify interim and closing bal-ance sheets to be included with the sale's closing documents. All of the parties knew that these documents would serve as a basis for setting the sale price. Within a few days, Williams signed an Asset Purchase Agreement that promised access to Parente's records with respect to Kenco. The sale closed in mid-August. In September, Williams was given the financial statements for Kenco's previous three years and the interim and closing balance sheets, all of which were certified by Parente. Williams's accountant found no errors in the closing balance sheet but did not review any of the other documents. The parties set a final purchase price. Later, however, Williams filed a suit in a federal district court against Parente, claiming negligent misrepresentation, among other things, in connection with Parente's preparation of the financial documents. Parente responded with a motion for summary judgment, asserting that the parties lacked privity. Under the Restatement (Second) of Torts, Section 552, how should the court rule? Explain.
Quick Reply
