Cengage Advantage Books: Introduction to Business Law 4th Edition by Timothy Koch, Jeffrey Beatty, Jeffrey Beatty, Susan Samuelson, Susan Samuelson

Exercise 16

Medtrans, an ambulance company, was unable to pay its bills. In need of cash, it signed an engagement letter with Deloitte Touche to perform an audit that could be used to attract investors. Unfortunately, the audit had the opposite effect. The unaudited statements showed earnings of $1.9 million, but the accountants calculated that the company had actually lost about $500,000. While in the process of negotiating adjustments to the financials, Deloitte resigned. Some time passed before Medtrans found another auditor, and, in that interim, a potential investor withdrew its $10 million offer. Is Deloitte liable for breach of contract