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Cpa Law

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CPA LAW EXAM1—Essay questions 1. David cannot sue A1 for breach of contract for the loss of his commission due to A1’s math error in the audit. By entering into a contract, an account implicitly agrees to perform the contract in a competent and professional manner. They need not ensure the absolute accuracy of their work, but they must exercise the care of a reasonably skilled professional. Only the math error cannot make A1 liable. However, if she breaches the contract because she didn’t finish her job on time as the contract indicating ”time of essence”, she is liable to Bob and the third-party beneficiary—Bank. 2. Bob cannot refuse to pay A1 anything. A1 can get the reasonable value on quasi contract. A1’s failure to perform a promise promptly is a material breach if time is of the essence. In this case, A1 cannot accomplish her work on time, then there is a breach of the contract. This breach of contract discharges Bob from any further duty under the contract. However, A1 could go into quasi-contracts. Because A1 confers a benefit upon Bob—render him the audit services, Bob knows the benefit, and the retention of the benefit is inequitable. So A1 could recover the reasonable value of the service she rendered to Bob. 3. The sales agreement cannot be successfully enforced against A1. Fraud in execution, which consists of a misrepresentation that deceives the defrauded person do not know, or does not have reasonable opportunity to know the very nature of the proposed contract, renders the agreement void. In this case, A1 didn’t realize what she signed was a contract. So there is no contract at all. The sales agreement cannot be enforceable. 4. If A1 uses the authorized means to accept the offer, then the acceptance is effective upon dispatch, and Carol can require A1 to purchase Carol’s home. If A1 uses unauthorized means to accept the offer, then...

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