Asked by Emily Ratliff on Jul 09, 2024
Verified
An employee prepared an appraisal of a property for his real-estate development company. The employee had been told that the appraisal would be used by the company to attract a potential investor, Mr. Jones, for the company's client, Mr. Lee. Because the appraiser carelessly forgot to check the recent changes in the zoning by-laws, the appraisal was not accurate. Mr. Jones was misled about the value of the land and suffered a financial loss of $200,000. On these facts, which of the following is true?
A) Mr. Jones could not take any action because he had no contract with the company or the appraiser.
B) A person cannot be sued for words that cause loss, only for actions that cause physical injury.
C) If Jones sues the appraiser, he cannot also sue the employer company.
D) The cause of action most likely to be taken by the investor is defamation.
E) To win in an action against the appraiser, Jones must prove that the appraiser owed him a duty of care, fell below the standard of care owed, and thereby caused him a foreseeable loss because of his reliance on the information.
Duty of Care
A legal obligation requiring a person to adhere to a standard of reasonable care while performing any acts that could foreseeably harm others.
Negligent Misstatement
A false statement made carelessly rather than with the intent to deceive, leading to someone's loss.
Economic Loss
Financial loss experienced as a result of another’s actions or failure to act, which can include lost profits, repair costs, and decreased value of property.
- Understand the responsibility that professionals like land appraisers have towards their clients and third parties who depend on their specialized knowledge.
- Comprehend the role of negligent misstatement leading to financial detriment in contexts relating to professional counsel and appraisals.
Verified Answer
AF
Ajmal FaizyJul 12, 2024
Final Answer :
E
Explanation :
The correct answer is E because it outlines the elements of negligence: duty of care, breach of that duty, causation, and foreseeable loss due to reliance on the provided information. In this scenario, the appraiser owed a duty of care to provide an accurate appraisal, breached that duty by not checking recent zoning changes, and caused Mr. Jones a financial loss because Mr. Jones relied on the inaccurate appraisal.
Learning Objectives
- Understand the responsibility that professionals like land appraisers have towards their clients and third parties who depend on their specialized knowledge.
- Comprehend the role of negligent misstatement leading to financial detriment in contexts relating to professional counsel and appraisals.