Raritan River Steel Co. v. Cherry, Bekaert & Holland
North Carolina Supreme Court
407 S.E.2d 178 (1991)
The accounting firm Cherry, Bekaert & Holland (defendant) audited Intercontinental Metals Corporation's (IMC) financial statements and issued a qualified opinion, a summary of which was later published in a Dun & Bradstreet report showing IMC's net worth as $6.9 million when it was actually negative $14.6 million; Raritan River Steel Company (plaintiff), a trade creditor unable to obtain IMC's actual financial statements, relied on that published summary to extend IMC additional credit. When IMC went bankrupt and Raritan recovered only part of what it was owed, Raritan sued the accounting firm as an intended third-party beneficiary of its audit contract with IMC and for breach of that contract; the trial court granted the firm summary judgment, the court of appeals reversed, and the firm appealed.
Whether a third party has a right to sue under a contract if the circumstances show that the promisee intended to give the third party the benefit of the promised performance.