Ralph and Aisha Engaged Emma, a Realtor, to Sell Their

question 37

Essay

Ralph and Aisha engaged Emma, a realtor, to sell their variety store. Emma represented to buyer Pavel that "this was a typical general store," selling gas, oil, hardware, beer, and groceries. She reported that the store had an annual gross income of over $1 million. Emma failed to inform Pavel that one-third of the store's profit was attributable to an accompanying lawn and garden equipment distributorship that Ralph and Aisha were not including in the sale. When Pavel visited the business, Emma directed him away from the garage area where the lawn and garden equipment was stored. Throughout all of these negotiations, Ralph and Aisha were unaware of Emma's misrepresentations. After purchasing the store, Pavel learned of the importance of the equipment sales from Ralph and Aisha. Are Ralph and Aisha liable for Emma's misrepresentation?

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Definitions:

Price of Y

This generally refers to the cost required to purchase a specific item or commodity denoted as "Y".

Income

Funds acquired regularly as a result of work or investment ventures.

Utility Function

Represents a consumer's preferences in a way that the utility or satisfaction they get from various goods or services can be measured and compared.

Budget Constraint

A limitation on the consumption choices of individuals or households, based on their income and the prices of goods and services.