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 had 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.
(a) 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)?
(b) What is the ethical basis for imposing vicarious liability on a principal for an agent's tort?