Hark, CPA, failed to follow generally accepted auditing standards in auditing Long Corp.'s financial statements. Long's management had told Hark that the audited statements would be submitted to several banks to obtain financing. Relying on the statements, Third Bank gave Long a loan. Long defaulted on the loan. In a jurisdiction applying the Ultramares decision, if Third sues Hark, Hark will:
A.
win because there was no privity of contract between Hark and Third.
Incorrect B.
lose because Hark knew that banks would be relying on the financial statements.
C.
win because Third was contributorily negligent in granting the loan.
D.
lose because Hark was negligent in performing the audit.
I chose B because I thought when in the jurisdiction of ultramares if the cpa knew that the financial statements would be relied on by a 3rd party outside of the privity of contract the CPA would still be responsible. Am I getting something mixed? Correct was A
.