Question

Ana and Frank asked Ruth John a real estate salesperson who worked for Exceptional Real Estate, to list for sale their house in Pleasant Valley, Vermont. Diane Griffin, a California resident, visited the house as a potential buyer. Ruth John worked under the supervision of David Krimmer, an officer of Exceptional Real Estate. Krimmer knew but did not disclose to Ruth or Diane, that the house was subject to severe and frequent winds, that a window had blown in years earlier,, and that other houses in the area had suffered wind damage. Krimmer knew of this because he lived in the Pleasant Valley area, had sold a number of nearby properties, and had been Underhill's zoning officer. Many valley residents, including Krimmer. had wind gauges on their homes to measure and compare wind speeds with their neighbors. Griffin bought the house, and several months later, high winds blew in a number of windows and otherwise damaged the property. Griffin filed a suit in a Vermont state court against Exceptional Real Estate and others, alleging a fraud. She argued in part that Krimmer's knowledge of the winds was imputable to Exceptional Real Estate. Exceptional Real Estate responded that Krimmers knowledge was obtained outside the scope of employment. What is the rule regarding how much of an agent's knowledge a principal is assumed to know? How should the court rule in this case? Why?

Answer 1

The case involves the doctrine of imputation where the principal is liable for the actions and factual affirmations by its agent to make the sale. Krimmer's knowledge of the potential chances of damage due to wind was directly related to the business he dealt in, the sale of properties, irrespective of where he got it from. His employment as a sales agent necessiates this kind of knowledge related to the objects of sale. His employer therefore holds liability for the non disclosure of wind threats to the plaintiff who suffered damages as a consequence.

The court should therefore hold the Exceptional Real Estate liable for the damages to the plaintiff, as the agent was a mere means of linking the customer to the company, which is actually a party to the contract with plaintiff. The agent, being an employee for the company has no liability towards plaintiff.