Opinion ID: 493289
Heading Depth: 3
Heading Rank: 1

Heading: The Ultramares Standard

Text: 6 This standard was first announced by the New York Court of Appeals in Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (N.Y.1931). There, Chief Judge Cardozo disallowed a negligence action against an accounting firm brought by a plaintiff who had neither contractual privity, Id. 174 N.E. at 446, nor a relationship so close as to approach that of privity. Id. Recently, in Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 493 N.Y.S.2d 435, 483 N.E.2d 110 (1985), the New York Court of Appeals reaffirmed its reliance on the Ultramares standard: 7 Before accountants may be held liable in negligence to noncontractual parties who rely to their detriment on inaccurate financial reports, certain prerequisites must be satisfied: (1) the accountants must have been aware that the financial reports were to be used for a particular purpose or purposes; (2) in the furtherance of which a known party or parties was intended to rely; and (3) there must have been some conduct on the part of the accountants linking them to that party or parties, which evinces the accountants' understanding of that party or parties' reliance. 8 Id. 493 N.Y.S.2d at 443, 483 N.E.2d at 118.