The comparative negligence rule replaced the harsh all-or-nothing approach of contributory negligence with a formula based upon allocation of fault.
The change from contributory negligence to comparative fault did not totally immunize defendants from liability if the plaintiff was the slightest bit negligent.
Courts now allow accountants to assert a comparative negligence defense and have affirmed the jury’s apportionment of damages between the accountants and the corporation.
Actually Foreseen Third Parties
“Middle ground” approach followed by most states expands class of third parties that can successfully sue auditor for negligence beyond near-privity to limited group whose reliance is (actually) foreseen, but not necessarily known to the auditor.
Rusch Factors, Inc. v. Levin, 19 68.
Rhode Island federal court held an accountant liable for negligence to a third party not in privity of contract.
Restatement (Second) of Torts.
Expands an accountant’s legal liability for negligence to any third parties (foreseen third party) identified as intended recipients of the work…should be foreseen as a relying on financial information.
Texas Court of Appeals held that if an accountant preparing audited statements knows or should know…the accountant may be held liable for negligent misrepresentation.
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