Question

For Frank to be liable under common law negligence, Sun at a minimum must prove that Frank:

1) Failed to discover any irregularities
2) Was negligent in auditing Cord's financial statements
3) Approved the merger plan with Cord Corp.
4) Caused Sun to suffer substantial losses

Answer 1

Under common law negligence, Sun must prove that Frank was negligent in auditing Cord's financial statements, including elements of duty, breach, causation, and damage. The correct answer is option 2 .

Step-by-step explanation:

For Frank to be liable under common law negligence, Sun must prove that Frank was negligent in auditing Cord's financial statements. This is the option that directly relates to the elements required to establish a case of negligence. Common law negligence involves a duty of care, breach of that duty, causation, and damages. To demonstrate negligence, Sun must show that:

1. Frank had a duty to act with reasonable care when auditing Cord's financial statements.
2. Frank breached this duty by failing to perform the audit with the expected level of care.
3. This breach of duty was the actual and proximate cause of Sun's losses.
4. As a result, Sun suffered substantial losses.

Applying this to the scenarios provided, the situation where a manufacturer is held liable due to prior knowledge of a defect aligns with the concept of negligence as the manufacturer owed a duty to produce safe vehicles, breached that duty, and caused harm. Similarly, in defamation cases like Curtis Publishing Co. v. Butts, negligence is found when news organizations recklessly disregard the truth. These examples illustrate the requirements for proving negligence in different contexts.