- This article is about vicarious liability in private litigation; for vicarious liability in criminal law, see Vicarious liability (criminal).
||The examples and perspective in this article may not represent a worldwide view of the subject. (August 2011)|
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Vicarious liability is a form of strict, secondary liability that arises under the common law doctrine of agency – respondeat superior – the responsibility of the superior for the acts of their subordinate, or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator. It can be distinguished from contributory liability, another form of secondary liability, which is rooted in the tort theory of enterprise liability.
Employers are vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment (sometimes referred to as 'scope of employment'). For an act to be considered within the course of employment, it must either be authorized or be so connected with an authorized act that it can be considered a mode, though an improper mode, of performing it.
Courts sometimes distinguish between an employee's "detour" vs. "frolic". For instance, an employer will be held liable if it is shown that the employee had gone on a mere detour in carrying out their duties, whereas an employee acting in his or her own right rather than on the employer's business is undertaking a "frolic" and will not subject the employer to liability. Employer will be held liable if an employee does an authorized act in an unauthorized way
Generally, an employer will not be held liable for assault or battery committed by employees, unless the use of force was part of their employment (such as a police officer), or they were in a field likely to create friction with persons they encountered (such as car re-possessors). However, the employer of an independent contractor is not held vicariously liable for the tortious acts of the contractor, unless the contractor injures someone to whom the employer owes a non-delegable duty of care, as when the employer is a school authority and the injured party a pupil.
Employers are also liable under the common law principle represented in the Latin phrase, "qui facit per alium facit per se" (one who acts through another acts in one's own interests). That is a parallel concept to vicarious liability and strict liability, in which one person is held liable in criminal law or tort for the acts or omissions of another.
The owner of an automobile can be held vicariously liable for negligence committed by a person to whom the car has been loaned, as if the owner was a principal and the driver his or her agent, if the driver is using the car primarily for the purpose of performing a task for the owner. Courts have been reluctant to extend this liability to the owners of other kinds of chattel. For example, the owner of a plane will not be vicariously liable for the actions of a pilot to whom he or she has lent it to perform the owner's purpose. In the United States, vicarious liability for automobiles has since been outlawed with respect to car leasing and rental in all 50 states.
One example is in the case of a bank, finance company or other lienholder performing a repossession of an automobile from the registered owner for non-payment, the lienholder has a non-delegatable duty not to cause a breach of the peace in performing the repossession, or it will be liable for damages even if the repossession is performed by an agent. This requirement means that whether a repossession is performed by the lienholder or by an agent, the repossessor must not cause a breach of the peace or the lienholder will be held responsible.
This requirement not to breach the peace is held upon the lienholder even if the breach is caused by, say, the debtor objecting to the repossession or resists the repossession. In the court case of MBank El Paso v. Sanchez, 836 S.W.2d 151, where a hired repossessor towed away a car even after the registered owner locked herself in it, the court decided that this was an unlawful breach of the peace and declared the repossession invalid. The debtor was also awarded $1,200,000 in damages from the bank.
In the United States, the question of parental responsibility generally and the issue of parental vicarious liability for the torts of their children is evolving. What is clear is that parents can be held liable for their own negligent acts, such as failure to supervise a child, or failure to keep a dangerous instrument such as a handgun outside the reach of their children.
The liability of corporations in tort
In English law, a corporation can only act through its employees and agents so it is necessary to decide in which circumstances the law of agency or vicarious liability will apply to hold the corporation liable in tort for the frauds of its directors or senior officers.
If liability for the particular tort requires a state of mind, then to be liable, the director or senior officer must have that state of mind and it must be attributed to the company. In Meridian Global Funds Management Asia Limited v. Securities Commission  2 AC 500, two employees of the company, acting within the scope of their authority but unknown to the directors, used company funds to acquire some shares. The question was whether the company knew, or ought to have known that it had acquired those shares.
The Privy Council held that it did. Whether by virtue of their actual or ostensible authority as agents acting within their authority (see Lloyd v Grace, Smith & Co.  AC 716) or as employees acting in the course of their employment (see Armagas Limited v Mundogas S.A.  1 AC 717), their acts and omissions and their knowledge could be attributed to the company, and this could give rise to liability as joint tortfeasors where the directors have assumed responsibility on their own behalf and not just on behalf of the company.
So if a director or officer is expressly authorised to make representations of a particular class on behalf of the company, and fraudulently makes a representation of that class to a Third Party causing loss, the company will be liable even though the particular representation was an improper way of doing what he was authorised to do. The extent of authority is a question of fact and is significantly more than the fact of an employment which gave the employee the opportunity to carry out the fraud.
In Panorama Developments (Guildford) Limited v Fidelis Furnishing Fabrics Limited  2 QB 711, a company secretary fraudulently hired cars for his own use without the knowledge of the managing director. A company secretary routinely enters into contracts in the company's name and has administrative responsibilities that would give apparent authority to hire cars. Hence, the company was liable.
Employees' Continued Liability And Indemnity
A common misconception involves the liability of the employee for tortious acts committed within the scope and authority of their employment. Although the employer is liable under respondeat superior for the employee's conduct, the employee, too, remains jointly liable for the harm caused. As the American Law Institute's Restatement of the Law, Third, Agency § 7.01 states,
- An agent is subject to liability to a third party harmed by the agent’s tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to liability although the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment.
Every American state follows this same rule.
The question of indemnification arises when either solely the employee or solely the employer is sued. If only the employee is sued, then that employee may seek indemnification from the employer if the conduct was within the course and scope of their employment. If only the employer is sued, then the employer can attempt to avoid liability by claiming the employee's conduct was outside of the scope of the employee's authority, but the employer generally cannot sue the employee to recover indemnification for the employee's torts. For an example of a court denying an employer the right to sue an employee for indemnification, see the case of Lister v Romford Ice Cold Storage.
In the 2003 decision Doe v. Bennett, the Supreme Court of Canada ruled that in cases of abuse scandals involving Catholic priests, liability derives from the power and authority over parishioners that the Church gave to its clergymen.
- Nolo Law web site[dead link]
- Kennerly, Maxwell. "Can I Set Up An LLC To Avoid Personal Liability In A Lawsuit?". Litigation & Trial Law Blog. Retrieved 24 May 2012.
- Your Name (this will appear with your post). "Vicarious Conclusion". Canadianunderwriter.ca. Retrieved 2013-10-05.
- H Laski, 'Basis of Vicarious Liability' (1916) 26 Yale Law Journal 105
- Department of Trade & Industry. Company Law Review: Attribution of Liability (PDF)