Lesson 4-Common Law Duties and Liabilities to Clients and Third Parties

Question 1

What are the four elements that need to be proved to win a breach of contract claim?

Answer 1

1. Existence of an enforceable contract
2. Plaintiff client complied with contractual obligations
3. Defendant accountant breached the contract
4. Damages were caused by the breach.

Question 2

What is the burden of proof in a breach of contract case?

Answer 2

preponderance of the evidence” standard, more likely true than not true (>50%).

Question 3

Can a defendant recover punitive damages in a breach of contract case?

Answer 3

No, only compensatory damages are recoverable.

Question 4

What is the Statute of Limitations for a Breach of contract case?

Answer 4

Oral contract: two years from breach; or

Written contract: four years from breach.

Question 5

What are 4 things that could justify a Breach of Contract?

Answer 5

1. Client refuses to provide accountant with the documents necessary to complete the tax return.
2. Client provides accountant with incomplete, inaccurate, or misleading information.
3. Client informs accountant that it will not pay her bill as promised.
4. Client’s CFO was incompetent

Question 6

Is breach of an oral contract actionable? Can obligations in a contract be implied?

Answer 6

Yes

Yes

Question 7

In order to win a negligence malpractice case, a plaintiff must prove the following four elements by a preponderance of the evidence:

Answer 7

1. Defendant accountant owed a duty of care to the client plaintiff
2. Defendant breached the standard of care.
3. The breach proximately causes an injury
4. Plaintiff client suffers damages

Question 8

What are two defenses to a Negligence Claim?

Answer 8

Statute of limitations-The SOL is 2 years from when the plaintiff knew or should have known of the right to sue.

Comparative negligence-If the plaintiff was also careless and that carelessness contributed causally to the loss, (recovery is barred if plaintiff’s carelessness exceeds 50%).

Question 9

What is scienter in a fraud case?

Answer 9

The defendant accountant knew or recklessly disregarded the falsity

Question 10

What is constructive fraud?

Answer 10

Reckless disregard or gross negligence

Question 11

What is the statute of limitation for fraud cases?

Answer 11

4 years

Question 12

What are the three approaches to negligence claims by 3rd parties?

Answer 12

Ultramares- Known user
Restatement of torts- Forseen
Rosenblum-Forseable user

Question 13

What approach to negligence claims by 3rd parties is most common?

Answer 13

Restatement of torts- Forseen

Question 14

In order to prove liability under The securities act of 1933 plaintiffs need to prove?

Answer 14

• Material misstatements or omissions in a securities offering registration statement
• a loss occurred

Question 15

What is a CPA’s defense to the Securities act of 1933?

Answer 15

Due diligence

Question 16

In order to prove liability under The securities act of 1934 plaintiffs need to prove?

Answer 16

• Material misstatements or omissions in a securities offering registration statement
• a loss occurred
• Causation due to misstatment
• Scienter
• Reliance