Claus Tells CPA Vernon That He Needs an Audit to Borrow

question 50

Multiple Choice

Claus tells CPA Vernon that he needs an audit to borrow money from Big Bank.Claus pays Vernon,and Claus takes Vernon's audit to Big Bank who makes the loan.When Claus defaults on the loan,Big discovers numerous liabilities that the audit did not reveal.Can Big Bank sue Vernon for negligence in a state that recognizes the near-privity rule?

• A)Yes,because Vernon breached the trust that Claus had placed in him.
• B)No,because Big and Vernon did not have a contract.
• C)Yes,because Big was an actually named third party.
• D)No,because Vernon does not guarantee the collection of Big's loans.

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