Question

A client seeking to recover damages from an auditor for breach of contract in an action based on negligence must show that the auditor had a duty not to be negligent. Identify at least three defenses an auditor can use against a breach of contract lawsuit.

Answer 1

The auditor can use the following as defense against a breach of contract suit:

The auditor used due professional care.

The client was contributorily negligent.

The client's losses were not caused by the breach.

Defenses under tort law are:

The auditor used due professional care.

The financial statements were not materially false or misleading.

The audit did not cause the client's loss.

The client was contributorily negligent.

Courts are often reluctant to allow the defense of contributory negligence because the auditor has special skills that most clients do not have.