Accountant J. Russton Bradshaw was retained by Steve May, the owner of May’s Custom Tile, to prepare the business’s tax return. In 2008, May decided to sell the business and instructed Bradshaw to provide financial records and tax returns to a prospective buyer. The potential buyer ultimately refused to enter a deal with May after learning the business’s largest client had filed for bankruptcy.

Eventually, Reperex Inc., Brad Ball, and David Ball (collectively, the Buyers) purchased May’s Custom Tile with the help of a business brokerage.

During the negotiations, the buyers had expressed interest in reviewing the business’s financial records—an idea that May was not partial to. Instead of sending the buyers the documents, May suggested, and the buyers agreed, to meet at Bradshaw’s office for a due diligence meeting.

The meeting lasted two hours or less. May, Bradshaw, the buyers, and the business broker were all present at the meeting. Bradshaw’s services were paid by May. It is undisputed that the buyers reviewed many of the financial records assembled by Bradshaw.

The buyers learned soon after their purchase that the business was not what they expected. The broker had given the buyers financial statements showing the business had profits of over $300,000 without mentioning the email the accountant had sent indicating that, in actuality, the business had only made $74,000. Among other things, the broker had failed to mention bankruptcy of the business’s largest client.

The buyers sued the broker and Bradshaw. In the accountant’s case, the buyers filed claims of negligent misrepresentation, fraud, and breach of fiduciary duty. Bradshaw responded by arguing there was no privity of contract between him and the buyers.

What does privity of contract mean, and why is it relevant to this case? What kind of argument can the buyers make to assert that there was indeed privity of contract? How do you think the court ruled? Why?