TORTS-NEGLIGENT MISREPRESENTATION-DUTY ARISING FROM CONTRACT TO PERSONS NOT PARTIES

Authors

Abstract

The defendants, accountants, examined the books of the Stern Co., knowing that their balance sheet and 32 certified copies would be exhibited as a basis for future credit, but not knowing of the plaintiff particularly. Through negligence they failed to discover and report insolvency. Relying upon the report showing a solvent concern plaintiff extended credit to the Stem Co. He sued for his loss in two counts, negligence and fraud. Held, defendants had no duty to plaintiff to exercise due care, so he can not recover for negligence in the examination. But defendants might be liable for fraud as by a representation that facts were true to their knowledge when in fact they had no knowledge or no reasonable basis for belief and negligence would be evidence of such fraud. Ultramares Corp. v. Touche (N. Y. 1931) 84 N. Y. L. J. No, 92, p. 1999.

Recommended Citation

TORTS-NEGLIGENT MISREPRESENTATION-DUTY ARISING FROM CONTRACT TO PERSONS NOT PARTIES, 29 Mich. L. Rev. 648 (1931).
Available at: https://repository.law.umich.edu/mlr/vol29/iss5/37