What are the three rules used to determine the accountant's liability to third parties?
What will be an ideal response?
The first, and oldest, rule is often referred to as the Ultramares Doctrine. Under this rule, the accountant is liable only to those in a privity-of-contract relationship. In other words, only the party who contracted for the accountant's work may sue.
A somewhat more liberal rule is found in Section 552 of the Restatement (Second) of Torts. This rule holds that accountants will be liable to a limited class of intended users of the information. Thus, the accountant owes a duty to the client and any class of persons the accountant knows is going to be receiving a copy of his or her work.
The broadest rule applies in an extremely limited number of states. The smallest minority of states holds the accountant liable to any reasonably foreseeable user of the statement the accountant prepares.
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Alan just bought 100 shares of Global, Inc. (GLO) at $45 per share and as protection he also bought a three-month put with a $45 strike price at a cost of $400
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