Hi! I need help. How should I answer the those two questions?

a) Under what principle might Smart Inventions be liable for Nokess fraud?

b) Is Smart Inventions liable in this case? Explain.

Spotlight on Smart InventionsPiercing the Corporate Veil. Thomas Persson and Jon Nokes founded Smart Inventions, Inc., to market household consumer products. The success of their first product, the Smart Mop, continued with later products, which were sold through info- mercials and other means. Persson and Nokes were the firms officers and equal shareholders. Persson was responsible for product development, and Nokes was in charge of day-to-day operations. In time, they became dissatisfied with each others efforts. Nokes represented the firm as financially dying, in a grim state, . . . worse than ever, and offered to buy all of Perssons shares for $1.6 million. Persson accepted.

On the day that they signed the agreement to transfer the shares, Smart Inventions began marketing a new product the Tap Light. It was an instant success, generating millions of dollars in revenues. In negotiating with Persson, Nokes had intentionally kept the Tap Light a secret. Persson sued Smart Inventions, asserting fraud and other claims.