Reno Poll, chief executive officer of Lincoln Avenue Bank, phoned Valerie Valentine, an audit partner in Tally & Rosemere LLP and the engagement partner for Bloomfield Plating Company, an electrolyte plating company serving the costume jewelry industry in southeastern New England. Poli told Valentine that he'd be forwarding a memorandum of understanding to Charles Bloomfield, the owner-manager of Bloomfield Plating, outlining the bank's understanding that a $300,000 working capital loan to Bloomfield Plating was conditional on Tally & Rosemere's issuing an unqualified opinion on Bloomfield's financial statements. Valentine told Poli that, although she had taken over the engagement from a recently retired partner, she planned to offer the same quality service that Tally & Rosemere had for the past nine years. Tally & Rosemere issued an unqualified opinion, Lincoln granted the loan to Bloomfield and, owing to a cash embezzlement scheme perpetrated by Charles Bloomfield, the company defaulted on the loan. Lincoln Avenue Bank sued Tally & Rosemere. In a pretrial meeting, attorneys representing Lincoln Bank argued that Poli had satisfied the linkage test in Credit Alliance v. Arthur Andersen & Co. by having notified Valentine orally—and Bloomfield in writing—that the loan was conditional on the firm's audit.

Required:

1. Explain Lincoln's motive in arguing that the linkage test had been established.

2. Will Lincoln prevail? Discuss the merits of Lincoln's argument.