New Hampshire
How Ernst & Young v. Pritchett applies in New Hampshire: state-specific rules, key cases, and bar exam notes for Corporate Law.
New Hampshire law closely follows the principles outlined in Ernst & Young v. Pritchett, particularly regarding auditor liability and the duty of care owed to third parties. The state emphasizes the necessity of establishing a direct relationship between the auditor and the third party to hold auditors accountable for negligence.
In New Hampshire, auditors can be held liable for negligence towards third parties if there is a known reliance on the audited financial statements and a close relationship between the auditor and the third party.
The court held that auditors could be liable for negligence if they had knowledge of specific third-party reliance on their work.
This case reinforced the standard that auditors owe a duty of care to specific third parties who justifiably rely on their financial audits.
The court ruled that an auditor's liability may extend to parties in a business transaction if a close relationship is established.
New Hampshire's approach mirrors the federal standard that allows auditor liability to third parties under certain conditions, particularly with known reliance. However, New Hampshire may not apply the broader 'foreseeability' standard used in some federal cases, focusing instead on the relationship element.
Understanding the application of Ernst & Young v. Pritchett is crucial for the New Hampshire bar exam, particularly in questions related to auditor liability and corporate governance.