Ray and Ann engaged Sue, a realtor, to sell their general store. Sue represented

Question

Ray and Ann engaged Sue, a realtor, to sell their general store. Sue represented to buyer Mike that "This is a typical general store" selling gas, groceries, beer and hardware. She informed Mike that the store had an annual gross income of over $1 million. Sue failed to inform Mike that 1/3 of the store's profit was attributable to an adjacent lawn and garden equipment distributorship that Ray and Ann were notincluding in the sale. When Mike visited the business, Sue directed him away from the garage area where the lawn and garden equipment was stored. Throughout all of these negotiations, Ray and Ann were unaware of Sue's misrepresentation. After purchasing the store, Mike learned of the importance of the equipment sales from Ray and Ann. Are Ray and Ann liable for Sue's misrepresentation?

Explanation / Answer

Ray and Ann should not be liable after selling the store as Sue is the one who misrepresented. As they hired Sue’s services and she is the one who misrepresented and sold the store fraudulently, Ray/ Ann had no idea about it and are not to be penalized. Mike can file a case against Sue’s firm for misrepresentation and ask for damages.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.