Credit Alliance Corp. v. Arthur Andersen & Co.
Court of Appeals of New York
483 N.E.2d 110 (N.Y. 1985)
In the first case, Arthur Andersen (defendant) prepared financial statements for a company that then gave them to its lender, Credit Alliance (plaintiff), without Andersen ever being told the reports were for that specific loan purpose or having any direct dealings with Credit Alliance. In the consolidated second case, Strahs & Kaye (S&K) prepared audits for a company knowing the primary purpose was to give the results to lender European American Bank (EAB), and S&K and EAB communicated regularly about the audited company's finances before it went bankrupt.
Whether an accountant can be held liable, absent privity of contract, to a party who relies to its detriment upon a negligently prepared financial report.