Max decides to invest in the stock of Millenium Television after he reads John\'
ID: 381654 • Letter: M
Question
Max decides to invest in the stock of Millenium Television after he reads John's audit, which includes a statement, known by John to be false, as to the value of numerous worthless securities held as corporate assets. If Max sues John in a state using the broadest test for determining an accountant's liability for negligence to third parties, he will be entitled to:
have John complete a new audit.
damages if he is a reasonably foreseeable plaintiff.
nothing, since he is an incidental beneficiary of the audit contract.
rescission of his purchase contract.
a.have John complete a new audit.
b.damages if he is a reasonably foreseeable plaintiff.
c.nothing, since he is an incidental beneficiary of the audit contract.
d.rescission of his purchase contract.
Explanation / Answer
In the above case Max decided to invest in Millenium television but doesnt invest hence he is a incidental beneficiary of audit contract hence he is a third party , so he does not poses any legal rights to claim for the false statement.Hence the answer is C) nothing , since he is an incidental beneficiary.
however if he had invested the answer would have been B) damages asa he would have legal rights in that case