NEW YORK’S HIGH COURT AGAIN CONSIDERS PRIVITY DOCTRINE * by
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چکیده
“That’s where the money is,” reportedly is a statement ascribed to the bank robber Willie Sutton when he was asked why he robbed banks. In the legal arena, there is often analogous reasoning when someone is aggrieved and seeks redress. This is particularly true when an investment in or loans to an entity go sour. After the debacle, generally the only ones around with deep pockets from whom to seek compensation are the accountants and lawyers for the entity. A particularly favored target for lawsuits, of course, is the accounting firm that certified and/or prepared the financial statements of the entity. Consequently, accounting firms are frequently hit with lawsuits by disgruntled investors and lenders. Over time, there is a tendency for basic legal principles to be eroded, or perhaps a better word is liberalized. This is particularly true with respect to the doctrine of privity of contract in general. Insofar as accountants (and other professionals) are concerned, however, the privity doctrine is still alive and kicking, at least in the state of New York, as exemplified by two recent cases favoring accountants, discussed hereafter in this article. To fully understand the new decisions, however, a background review is apropos.
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