Quiz 35: Liability of Accountants and Other Professionals

Business

Yes , this business combination violates the antitrust laws. Forming a joint venture is an effort to monopolize. It may be concluded as a creation of an unlawful monopoly where the joint venture dominates the market for a software research, development, and production. The joint venture may obtain market power by repressing competition with anticompetitive move, and not because its product is superior to others. Under Sherman Act of antitrust laws, all business contracts, or combinations that unreasonably constrain interstate and foreign trade violate the antitrust laws. This may further include agreements to fix prices among competitors, provide bids, and distribute customers. These are punishable offenses on as criminal grounds. A per se violation means no further investigation is required of a conduct's effects on the market competitiveness because its intentions are so clear and obvious. Joint venture between A and B is a per say violation as it involves contract or conspiracy that clearly violates the antitrust laws. The joint venture limits competition, and thus reduces productivity. The merger was formed by A and B where B was a surviving firm. If the resulting merger is likely to increase the price paid by the consumers for their goods and services, the merger would be held in violation of antitrust laws. Further, there would be violation of antitrust laws if the merger harms the competition in the market.

Professionals may be liable to clients under the following common law theories: (a)Breach of contract: Any failure of the professional to perform as per the terms and obligations of the contract may be held liable for the breach of contract and damages caused as a result of the same. (b)Negligence: A professional must perform his or her duties with the care, knowledge, and judgment usually used by the professionals in the same or similar situations. If a professional fails to do so, it will be considered as negligence. Any accountant's violation of (Generally Accepted Accounting Principles) and GAAS (Generally Accepted Auditing Standards) is prima fade evidence of negligence. An accountant can be held liable for revealing confidential information or the contents of working papers without the client's consent or any such malpractice. (c)Fraud: A professional's actual intent to misrepresent a material fact to a client, and the client believes the misrepresentation to his/her injury, is fraud. Gross negligence in performing professional duty is a constructive fraud.

Generally accepted accounting principles are a general framework of conventions, rules, and procedures for financial accounting. Perkins failure to abide by generally accepted accounting principles may hold him liable for the damages caused to the client, Tucker. His negligence in preparing financial statement resulted in seriously inaccurate results. As a consequence, Perkins will be liable for the losses suffered by Tucker. Ultramares Rule states that liability will be imposed only in the presence privity or near privity of the third party with the accountant. Yes , Tucker can recover damages from Perkins. Molly Tucker, being Larkin's creditors, was a third party whose relationship with Perkin was "so close as to approach that of privity".

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