Intercontinental Metals Corp.(IMC) contracted with the accounting from Cherry, Bekaert, & Holland to perform an audit. Cherry issued its opinion about IMC, giving all copies and its report directly to the company. IMC later permitted Dun & Bradstreet to examine the statements, and Raritan River steel company saw a report published by Dun and Bradstreet. Relying on the audit, Raritan sold IMC at 2.2 million dollars’ worth of steel on credit, but IMC promptly went bankrupt. Raritan sued Cherry, claiming that IMC promptly was not as sound as Cherry had reported and that accounting firm had breached its contract with IMC comment Raritan’s suit
Comment on Raritan’s suit
Cherry, Bekaert, & Holland audited Intercontinental Metals Corp and over it to company. The company published this report. Raritan River steel company published this reports and sold it at 2.2 million dollars’ worth of steel to Intercontinental Metals Corp on credit. But Intercontinental Metals Corp went bankrupt at last.
For this reason, Raritan River steel company sued Cherry accounting firm because they did not prepare the true report and it breached the contract with Intercontinental Metals Corp because Intercontinental Metals Corp needed true and reliable audit report. In this case Raritan River steel company is third party beneficiary of the contract between Intercontinental Metals Corp and Cherry accounting firm