Jamie Paliath worked as a real estate agent for Home Town Realty of Vandalia, LL

Question

Jamie Paliath worked as a real estate agent for Home Town Realty of Vandalia, LLC (the principal, a real estate broker). Torri Auer, a California resident, relied on Paliath’s advice and assistance to buy three rental properties in Ohio. Before the sales, Paliath represented that each property was worth approximately twice as much as what Auer would pay and that there was a waiting list of prospective tenants. Paliath also stated that all of the property needed work and agreed to do the work for a specified price. Nearly a year later, substantial work was still needed, and only a few of the units had been rented. Auer sued Paliath and Home Town Realty for fraudulent misrepresentation. [Auer v. Paliath, 140 Ohio St.3d 276, 17 N.E. 3d 561, 2014 -Ohio- 3632 (2014)] (see liability in Agency Relationships.) (488, Miller)

1. Were Paliath’s representations to Auer within the scope of her employment? Explain. Will the court hold the principal (Home Town Realty) liable for the misrepresentations of the agent (Paliath)?

2. What is the ethical basis for imposing vicarious liability on a principal for an agent’s tort?

Explanation / Answer

1. Paliath’s representations to Auer were within the scope of her employment as she helped him buy the properties. The court would hold the principal (Home Town Realty) Liable for the misrepresentation of the agent (Paliath) as the agent is a representative of the company. Unless the company can prove that they trained their agent to be accurate and ethical and that they warned him regarding cheating clients, the principal will be held liable for the misrepresentation of their agent.  

2. It is the responsibility of the principal to train its agents so that they do not portray false information to clients just because they have to sell the properties. They should have warned the agents regarding unethical selling practices and its consequences. Further, fraudulent misrepresentation severely affected the morale of the client in this case. Since the agent is a representative of the company it is definitely ethical to impose vicarious liability on the principal.

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

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