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Question
Brown & Co., a CPA, issued an unqualified opinion on the financial statement of its client, King Corp. Based on the strength of King's financial statements, Safe Bank loaned King $500,000. Brown was unaware that Safe would receive a copy of the financial statements or that they would be used in obtaining a loan by King. King defaulted on the loan. If Safe commences an action for common law fraud against Brown, then to be successful, Safe must prove that in addition to other elements it:
A. was in privity of contract with Brown.
B. was not contributorily negligent.
C. was in privity of contract with King.
D. justifiably relied on the financial statements.
Answer
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