Ark. Code Ann. » Title 16 Chapter 114
Arkansas Code Annotated

Ark. Code Ann. § 16-114-302 (2020)

Liability of accountants

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No person, partnership, or corporation licensed or authorized to practice under the Public Accountancy Act of 1975, § 17-12-101 et seq., or any of its employees, partners, members, officers, or shareholders shall be liable to persons not in privity of contract with the person, partnership, or corporation for civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by such person, partnership, or corporation, except for:

  1. Acts, omissions, decisions, or conduct that constitutes fraud or intentional misrepresentations; or
  2. Other acts, omissions, decisions, or conduct if the person, partnership, or corporation was aware that a primary intent of the client was for the professional services to benefit or influence the particular person bringing the action. For the purposes of this subdivision (2), if the person, partnership, or corporation:
    1. Identifies in writing to the client those persons who are intended to rely on the services; and
    2. Sends a copy of the writing or similar statement to those persons identified in the writing or statement,

then the person, partnership, or corporation or any of its employees, partners, members, officers, or shareholders may be held liable only to the persons intended to so rely, in addition to those persons in privity of contract with such person, partnership, or corporation.

History. Acts 1987, No. 661, § 1.

Publisher's Notes. This section is also codified as § 17-12-702.

Research References

Ark. L. Rev.

Morrison & George, Arkansas's Privity Requirement for Attorney and Accountant Liability, 51 Ark. L. Rev. 697.

U. Ark. Little Rock L.J.

Survey — Attorneys, 10 U. Ark. Little Rock L.J. 539.

Case Notes

Benefit to Others.

Where accounting firm never identified plaintiff as a person who was intended to rely on the accounting firm's services, nor did plaintiff allege in his complaint that firm sent him a copy of a statement announcing such intent, plaintiff was not in privity of contract, and did not qualify as a third-party beneficiary or fall within subdivision (2). Swink v. Ernst & Young, 322 Ark. 417, 908 S.W.2d 660 (1995).

Statute of Limitations.

The limitations period in professional malpractice cases begins to run when the wrongful acts occur, not when they are discovered. Swink v. Ernst & Young, 322 Ark. 417, 908 S.W.2d 660 (1995).

Notes of Decisions
Cited in 5 cases, 1989–1999 · leading case: Swink v. Ernst & Young, 908 S.W.2d 660 (Ark. 1995).
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Swink v. Ernst & Young, 908 S.W.2d 660 (Ark. 1995). · cites it 12× “In doing so, the trial court stated that, under Arkansas law, Ark. Code Ann. § 16-114-302 (Supp. 1993), an accountant is not liable to persons not in privity of contract with the accountant except in cases where fraud or intentional misrepresentation is shown.”
McDonald v. Pettus, 988 S.W.2d 9 (Ark. 1999). · cites it 3× “Although Swink dealt with the accountant-immunity statute, Ark. Code Ann. § 16-114-302 (Supp. 1997), instead of the lawyer-immunity statute, Ark.”
Fed. Deposit Ins. v. Deloitte & Touche, 834 F. Supp. 1129 (E.D. Ark. 1992). · cites it 3× “§ 16-114-302 (1987 & Cum.Supp.1991). The law moves the State somewhat closer to the Restatement position, but still affords accountants a significant amount of protection from liability to third parties.”
Colonial Bank v. Ridley & Schweigert, 551 So. 2d 390 (Ala. 1989). “1986), and subsequent legislation: Ark. Code Ann. § 16-114-302 (Supp. 1987)); Nebraska ( Citizens National Bank of Wisner v.”
Kohala Agric. v. Deloitte & Touche, 949 P.2d 141 (Haw. App. 1997). “See Ark.Code Ann. § 16-114-302 (Michie Supp. 1997); Ill.”
Ark. Code Ann. § 16-114-302(2): 1 case
Swink v. Ernst & Young, 908 S.W.2d 660 (Ark. 1995). “In doing so, the trial court stated that, under Arkansas law, Ark. Code Ann. § 16-114-302 (Supp. 1993), an accountant is not liable to persons not in privity of contract with the accountant except in cases where fraud or intentional misrepresentation is shown.”
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