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If one assumes that courts would assign high priority to the public duty of auditors, it seems unlikely that they would enforce the disclaimers and remedy limitations.(n360) But if these provisions were enforceable, it is likely that financial markets would tend to overcompensate for the risks these disclaimers seek to shift. Creditors and investors faced with auditors' exculpatory language would be unlikely to give the audit opinion the credibility to which it may in fact be entitled. The "clean opinion" backed up by a lack of exculpation is what clients and third parties generally seek. Anything less raises a red flag. One reason the large, prestigious accounting firms are traditionally sought for audits is the dollars and cents credibility their unqualified opinions bring to their clients.(n361)

The AICPA also recognizes the psychological value of uniformity. Its pronouncements require the unqualified opinion to be rendered in standard form and language.(n362) Any qualifications also must follow a standardized format. It is unlikely that varying forms of disclaimers of liability and limitations of remedy would be countenanced by the profession -- and for good reason: they would be greeted with great suspicion by all users of financial information. Standardized disclaimers and remedy limitations might catch on over time, but without legislative approval,(n363) courts would certainly give them close scrutiny and would certainly find them questionable on public policy grounds.

The Likierman Report notes that British auditors are precluded by statute from limiting liability to their clients,(n364) although, theoretically, other professionals could.(n365) With respect to the non-auditors, however, the Report suggests that "the effectiveness of such disclaimers can be doubtful because of the uncertainty of whether the terms might fall under the Unfair Contract Terms Act 1977."(n366) Subsequent cases interpreting the 1977 Act's statutory phrase "unreasonable restrictions on liability for economic loss" would appear to confirm those doubts.(n367) It seems likely that a similar result would be obtained judicially in the United States.

Victor Goldberg(n368) develops the contract approach from the perspective of a total privily rule, a sort of Ultramares plus regime in which third parties are precluded from suing auditors even for fraud.(n369) Under such a regime, third parties seeking assurances from auditors would have to negotiate and presumably pay for these undertakings either directly by negotiating a contract of indemnity with the auditor or indirectly by demanding some sort of surety bond from the client that would indemnify specifically identified losses caused by auditor negligence or fraud.(n370) Goldberg acknowledges that neither auditors nor third parties are likely to initiate such contract negotiations very often. He attributes this predicted lack of enthusiasm to the conclusion that auditors are "not very good guarantors" and "would rarely agree to compensate third parties,"(n371) and that third parties are likely to prefer a host of more direct and traditional assurances from the auditors' clients.(n372)

Goldberg points out, as do we, that audit failure can be subsumed into the total risk equation third parties make before parting with their money, and against which they can protect themselves by insisting on risk premiums. So what role remains for tort law's ex post "guarantee" against auditor negligence? Only one, deterrence. But why should this be necessary if as Professor Goldberg notes, "In the half century following Ultramares, businessmen did not successfully design a guarantee that compensated some classes of losers in the event of an


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