MEANING & DEFINITION

Vicarious liability refers to the legal doctrine where one person is held responsible for the wrongful actions of another person.

This concept is an exception to the general rule that individuals are liable only for their own wrongful acts. In vicarious liability, the law imposes responsibility on a person who did not directly commit the wrongful act but has a special relationship with the wrongdoer.

The Latin maxim “respondeat superior“ meaning “let the master answer” forms the basis of vicarious liability.

Vicarious liability most commonly arises in three types of relationships:

• Principal and agent
• Partners in a partnership
• Employer and employee (master and servant)

The underlying rationale for vicarious liability is that the person held vicariously liable is often in a better position to compensate the victim and can more easily bear the financial burden of liability. It also incentivizes those in positions of authority to exercise proper care in selecting supervising and controlling those working under them.

TYPES OF RELATIONSHIPS

Principal and Agent Relationship

In a principal-agent relationship the principal can be held vicariously liable for torts committed by the agent within the scope of the agency. The liability arises based on the legal principle “Qui facit per alium facit per se” which means “he who acts through another acts himself.” For any act authorized by the principal and carried out by the agent both can be held jointly and severally liable. The authority given to the agent may be express or implied.

Key points regarding principal-agent vicarious liability:

• The principal is liable even if the agent acted solely for personal benefit without the principal’s knowledge if it was within ostensible authority
• Both principal and agent are considered joint tortfeasors
• The plaintiff can choose to sue either the principal or agent or both

A landmark case illustrating principal-agent liability is Lloyd v. Grace Smith & Co. [1912] AC 716. In this case a solicitor’s clerk fraudulently induced a client to transfer property to himself. The House of Lords held the solicitor’s firm vicariously liable as the clerk was acting within his apparent authority even though it was for personal gain.

Partners in a Partnership

Partners in a firm are vicariously liable for torts committed by any partner in the ordinary course of partnership business. Key aspects include:

• Liability of each partner is joint and several
• All partners are considered joint tortfeasors
• The wrongful act must be connected to the partnership business

The case of Hamlyn v. Houston & Co. [1903] 1 KB 81 illustrates partnership liability. One partner bribed the plaintiff’s clerk to divulge trade secrets. The court held both partners liable for the tort of inducing breach of contract even though only one partner committed the act.

Employer-Employee & Master-Servant

This is the most common form of vicarious liability. An employer can be held liable for torts committed by employees in the course of their employment. Key principles include:

• The employer’s liability is based on the doctrine of “respondeat superior“
• Both employer and employee are joint tortfeasors with joint and several liability
• The employer is liable even if the employee acted against express instructions

ESSENTIALS

Two key elements must be established for an employer to be vicariously liable:

1. The tort was committed by a “servant” (employee)
2. The tort was committed in the “course of employment”

Who is a Servant?

A servant is a person employed to do work under the direction and control of the employer regarding the manner of performing the work. This is distinct from an independent contractor who is not subject to such control. The “control test” is used to distinguish employees from independent contractors.

Tirlok Singh v. Kailash Bharti 1986 ACJ 757

An owner was not vicariously liable when his brother took his motorcycle without permission and caused an accident as there was no agency relationship.

Rajasthan State Road Transport Corpn. v. K.N. Kothari AIR 1997 SC 3444

The Supreme Court held that transfer of effective control over a servant can make the transferee vicariously liable even if the servant remains on the original owner’s payroll.

Course of Employment

For vicarious liability to arise the tort must be committed in the course of employment. This means the wrongful act must be:

• Authorized by the employer or
• So connected with authorized acts that it can be regarded as a mode of doing the authorized act

State Bank of India v. Shyama Devi AIR 1978 SC 1263

The Supreme Court held that a bank employee’s fraud was not within the course of employment so the bank was not vicariously liable.

Century Insurance Co. v. Northern Ireland Road Transport Board (1942)

Driver lit cigarette while transferring petrol causing explosion. It was held within course of employment as negligent mode of doing authorized work.

Limpus v. London General Omnibus Co. (1862)

Bus driver obstructed rival bus against express instructions. It was held within course of employment as wrongful mode of doing authorized act.

Exceptions to Employer’s Liability

An employer is generally not liable for:

• Acts of independent contractors
• Acts of employees outside the course of employment
• Purely personal acts of employees unconnected to employment

Exceptions To Non-Liability For Independent Contractors

While employers are generally not liable for acts of independent contractors there are some exceptions:

• Employer authorizes or ratifies an illegal act
• Cases of strict liability (e.g. Rylands v Fletcher rule)
• Extra hazardous work
• Breach of statutory duty
• Dangers caused on highways
• Withdrawal of support from neighboring land
• Breach of non-delegable duty towards employees

IMPORTANT CASE LAWS

The doctrine of vicarious liability is not codified in Indian statutes but has evolved through judicial precedents. Some key precedents include:

Fraud by Employee

Employers can be held liable for fraudulent acts of employees if committed in course of employment even if not for employer’s benefit.

Lloyd v. Grace Smith & Co. (1912)

• Facts: Clerk fraudulently obtained property from client
• Held: Employer liable as fraud committed within apparent authority

Theft by Employee

Employers may be liable for theft by employees in certain cases:

• Cheshire v. Bailey (1905) – Employer not liable for theft of bailed goods by employee
• Morris v. C.W. Martin & Sons Ltd (1965) – Employer liable for theft of bailed goods by employee entrusted with them

Mistake by Employee

Employers are liable for mistakes made by employees in course of employment even if expressly prohibited.

Poland v. Parr & Sons (1927) – Employer liable for excessive force used by employee to protect property

Negligence of Employee

Employers are liable for negligent acts of employees in course of employment even if for employee’s own comfort or convenience.

• Williams v. Jones (1865) – Employer not liable for carpenter lighting pipe negligently
• Century Insurance Co v Northern Ireland Road Transport Board (1942) – Employer liable for driver lighting cigarette negligently while transferring petrol

Hospital Cases And Vicarious Liability

The position on hospital liability has evolved over time:

• Initially in Hillyer v. St. Bartholomew’s Hospital [1909] 2 KB 820 hospitals were not held liable for negligence of professional staff due to lack of control
• This changed with cases like Gold v. Essex County Council [1942] 2 KB 293 where hospitals were held liable for negligence of staff including radiographers and surgeons
• In Cassidy v. Ministry of Health [1951] 2 KB 343 hospitals were held liable for post-operative negligence of staff

The modern position is that hospital authorities can be vicariously liable for negligence of medical professionals employed by them.

Lending a Servant

When an employee is temporarily lent to another employer the question of vicarious liability depends on who has the right to control the manner of doing the work.

In Mersey Docks & Harbour Board v. Coggins & Griffiths (Liverpool) Ltd. [1947] AC 1, the House of Lords held that for a crane driver lent with the crane the permanent employer remained vicariously liable as they retained control over how the crane was to be operated.