Sarah was hired by Micro Corp. to identify a suitable warehouse for Micro’s newly expanding business

Sarah was hired by Micro Corp. to identify a suitable warehouse for Micro’s newly expanding business. Sarah is a licensed real estate broker and required Micro to execute her standard form of broker agreement that express states that Sarah’s authority is limited to identifying property and negotiating a lease rate. Micro also added a provision to the contract that Sarah not disclose the identity of Micro to any potential landlords. After identifying the perfect location and warehouse Sarah negotiated a lease rate and signed a lease agreement with Warehouse Inc. Sarah informed Warehouse Inc. that she was acting on behalf of a large retailer but could not disclose the name of the retailer. Micro Corp decided it didn’t like the lease and informed Sarah it would not honor her signature because she lacked authority to sign the Lease Agreement.

If Warehouse Inc. sues Sarah and Micro Corp. for breach of the Lease Agreement who will be liable and why?

 

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