Vicarious Liability

What is vicarious liability in tort law?

Meaning of Vicarious liability: – Vicarious liability is a situation in which one party is held partially responsible for the unlawful actions of a third party. The third party also bears its share of liability. Vicarious liability is a liability where the master is liable for the tort of his servant, principal for his agent, partner for another partner and an employer for an employee. 

Vicarious liability can arise in situations where one party is supposed to be responsible for (and have control over) a third party and is negligent in carrying out that responsibility and exercising that control. For example, ‘A’, a driver who works for ‘B’ and while driving B’s car for taking him to office, hits a pedestrian ‘C’ due to negligence in driving. In such a case, even if ‘B’ was not driving the car, he would still be liable for the accident which was caused by A’s negligence.

The legal maxim Qui Facit per alium Facit per se also applies to the concept of vicarious liability, which means he who acts for another, acts for himself.

Relations in which Vicarious Liability Arises

These are the major relations in which vicarious liability of a person arises: –

1. Master and Servant;
2. Partners in a Partnership Firm;
3. Principal and Agent;
4. Company and its Directors; and
5. Owner and Independent Contractor.

Explanation: –

1. Master-Servant Relationship: – In relation to the master-servant, the master employs the services of the servant and he acts on the orders of the master and thus a special relationship exists between the two and in case of atrocities committed by the servant, his master is also liable. Master will be held liable for the tort or wrongful act committed by his servant during the course of employment. Obviously, the servant will also be held liable. There are many cases in which a servant acts for his master and thus in law it is assumed that the master was himself doing that act, so if the servant commits an illegal act the master will also be liable for the same. For the compensatory liability of the master to arise, these necessary conditions have to be fulfilled: –
   1. The servant has done an act which is equivalent to a torture.
   2. Such heinous act is committed by the servant in the course of his employment under the master.

2. Partners in a Partnership Firm:– A partnership firm is a type of business in which a group of people, also called partners, come together. They set up their own firm and provide services and products through it. However, a partnership firm is not treated as a separate legal entity. All the partners are liableto thesame extentas the guilty partner. The relationships that partner share with each other are the same as those of the principle and the agent. For the atrocities committed by any partner of the company, all the partners will be held liable for damages. The liability of each partner is joint and several. Each partner in a partnership firm acts on behalf of the other partner or on behalf of the partnership. As a result, the partnership may be held liable for loss to the customer. The liabilities of a partner to third parties are as follows: –
   1. Liability of a Partner for the works of the Firm: – Each partner is jointly and severally liable. All the partners can be sued jointly or individually by the creditors of the firm.
   2. Liability of the firm for wrongdoing of Partner: – The firm is equally liable to the partner if any third party has caused loss or injury or damage or penalty has been imposed due to wrongdoing or omission of the partner. However, the partner must act in the ordinary course of business of the firm or with the authority of his partners.

3. Principal and Agent: – An agent is a person who acts on behalf of the principal. When a person appoints another to act on his behalf, it creates a relationship between the principal and agent. Because the principal put the agent in a position where a wrong was committed, the principal is vicarious liable for the agent’s actions. Therefore, if an agent does any wrongful act in the course of his employment, then the master will be held liable for the acts committed by the agent. A principal shall be liable for the actions of an agent when it is expressly delegated to the agents by the principal. Suppose the agent performs some activity in the absence of the principal, which favours the principal, even though the principal does not know this act. In that case, he will still be held responsible as the agent acted for the principal’s benefit. The explicit right to do a certain act also includes the implied authority to do all the things necessary to do the work done in a proper and normal manner. Following are the tests to check whether principal-agent relationship exists: –
   1. Express appointment and publishing the same to the outside world;
   2. Implied actions and conduct which leave the impression of an agent;
   3. In case of emergency, appointment by necessity; and
   4. A distinguishing test from the M-S relationship is that the agent has the power to enter into contracts on behalf of the principal.

4. Company and its Directors: – A company is a separate legal entity but does not function on its own. It acts through its directors/officers and when such directors/officers act on behalf of the company, the company is liable for those acts on the application of “Principal-Agent” principle. However, for an act of the company, such directors/officers are not charged unless there is an express provision in the statute to make such persons alternatively liable or for the alleged criminal acts of the said persons. Therefore, the principle of vicarious liability simply means the situation where one person is held accountable for the actions of another. Every director is not liable for the actions and conduct of the companies, but only those directors who are aware of such contraventions or take part in such proceedings without any objection, or gave consent of the same the that director will be held liable. Generally, Managing Director, Whole Time Director, Executive Director, CEO are in charge of day-to-day business operations and management and hence, they are responsible for any actions of the company. However, an independent director and a non-executive director may be held liable if the following conditions are met: –
   1. Acts of omission or commission by a company that took place in their knowledge; and
   2. With their consent or connivance or where they did not act diligently.
   3. Under no circumstances, independent directors and non-executive directors can be held responsible if the above conditions are not met.

5. Owner and Independent Contractor: – An independent contractor is a person who does work for another person (employer). He is not under any control of the employer (Principal or Master). He is his own master. An independent contractor performs his duties at his discretion. An independent contractor undertakes to produce a given result, but in the execution of that work, he is not under the order and control of the person to whom he is giving the service. Generally, a contractor supervises the worker community and compensates them for their service. Ordinarily, an employer is not liable for the tort committed by an independent contractor. But there are certain conditions where even the employer will be held liable: –
   1. The employer is liable only if he has committed a tort;
   2. When the employer authorises him to commit a tort;
   3. In torts of strict liability; and
   4. Negligence of an independent contractor.

Difference between an Independent Contractor and Servant

A servant is a person whom another person employs to work under the discretion and control of his master. Whereas, an independent contractor is a person who is employed by another person to perform work under his own discretion. He is his own master. He controls all his actions. An owner can examine the work of a servant and the method used to complete that work but he cannot examine an independent contractor.

For example: –

1. If a truck driver is servant of ‘A’. If he negligently knocks someone down while on the job, then ‘A’ will be responsible for that. If ‘A’ hire a driver of a transport company and if he kills someone by negligence, then ‘A’ will not be responsible for that.
2. If ‘P’ owns a newspaper company and his machinery breaks down and he calls ‘J’ to get it repaired. Here ‘P’ can instruct him what to do but how to repair the machinery, it is left to be done by ‘J’ without any instruction from ‘P’.

Case Laws under Vicarious Liability

1. Pushpabai Purshottam Udeshi & Ors. vs. Ranjit Ginning & Pressing Co. (P) 1977 AIR 1735, 1977 SCR (3) 372

Facts of the case: – The deceased respondent was traveling in a car operated by the manager of the company and it met with an accident which resulted in his death. The dependents of the deceased filed a claim.

Judgement of the case: – The Tribunal allowed the damages but on appeal in the High Court, it was quashed on the ground that the accident does not render the respondent company liable. But the Supreme Court in its judgment quashed the High Court’s decision and held that it is clear from the facts of the case that the accident was caused by the negligence of the manager who was driving the vehicle in the course of his employment and, therefore, the respondent company was due to his negligence and was responsible for the act.

2. Anita Bhandari & Ors. vs. Union of India (2003) 2 GLR 1093

Facts of the case: – The husband of the petitioner went to a bank and while entering inside it, the cash box of the bank was also being carried inside and as a result, the security guard in a haste shot him and caused his death. The petitioner had claimed that the bank was vicariously liable in the case because the security guard had done such act in the course of employment but the bank had contended that it had not authorized the guard to shoot.

Judgement of the case: – The Court held the bank liable as the act of giving him gun amounted to authorize him to shoot when he deemed it necessary and while the guard had acted overzealously in his duties but it was still done in the course of employment.