Vicarious Liability

Business, Legal & Accounting Glossary

Definition: Vicarious Liability

Full Definition of Vicarious Liability

Vicarious liability is the principle by which one person can be held liable for the torts of another. The person held vicariously liable need not necessarily be a tort-feasor himself — he may in some circumstances be completely blameless — but there must usually be some sense in which he has authorised the acts of the party who is at fault.

There are three common circumstances in which person A may be vicariously liable for the torts of person B.

  1. There is a ‘master-servant’ relationship; for example, A is B’s employer. Employers may be held liable for the actions of their employees if they incur these liabilities in the course of the employer’s business, and even the employer is not at fault.
  2. Where there is a ‘principal-agent’ relationship. If B is A’s agent, B A may be liable for A’s torts
  3. Where A and B are in a business partnership. In general, partners are liable for the torts of other parties committed in the course of business.

As a general principle, parents are not vicariously liable for the torts of their children; however, parents may be liable in their own right in negligence if they fail to exercise reasonable parental control over their children.

Vicarious Liability Of Employers

The general rule here is that it is the fact of employment that gives rise to the vicarious liability, not the actions of the employer who may be completely blameless. In Rose v Plenty (1975) the employee was acting in a manner expressly prohibited by the employer, but was nevertheless held liable in the Court of Appeal when the employee caused an injury. To establish vicarious liability, the claimant has to show two things:

  1. The tort-feasor was the ‘servant’ of the defendant
  2. The tort-feasor was acting in the course of the defendant’s business

The claimant should also bear in mind that:

  1. particular rules exist for certain special categories of the defendant (e.g., the Crown);
  2. where the claimant is himself an employee of the vicariously-liable employer, he may have a cause of action against the employer in his own capacity as well as vicariously.

Who is a servant?

Where the tort-feasor is a genuine employee of the defendant, he will generally be a ‘servant’ for these purposes and no difficulty arises. Problems usually crop up where the tort-feasor is a self-employed person, acting under a contract to perform a specific task. It is then not clear that a ‘master-servant’ relationship arises between the tort-feasor and the defendant. Various tests have been proposed to identify whether there is a master-servant relationship.

  1. The traditional ‘control test’. If the employer determines how the work is to be done, rather than merely what is to be done, there is a master-servant relationship. Difficulties arise where the employee is a professional person with a high degree of autonomy; most of the case-law in this area concerns doctors and medical negligence. In Collins v Hertfordshire CC (1947), it was suggested that a health authority could be vicariously liable for some of its staff, but not for a surgeon because the authority could not dictate the manner of his work. This reasoning was doubted in Cassidy v Ministry Of Health (1951) — the health authority was liable for the torts of people it routinely employed, notwithstanding the professional nature of their duties. Many of the medical negligence cases raise the additional difficulty that very often the defendant employer was liable in its own right, as well as vicariously; it is rather difficult to determine whether liability was imposed because of the authority’s primary failure to discharge its duties or its vicarious liability. In Cassidy, Lord Denning suggested that the distinction was not important, but this approach has not found favour in later cases.
  1. The ‘integral to the business’ test. It was suggested in Stevenson Jordan Harrison v McDonnell Evans (1952) that a master-servant relationship exists where there the employee’s work is an integral part of the business, and not accessory to the business.
  1. The ‘economic reality’ test. Even if the employer controls the employee’s manner of working sufficiently that the arrangement would satisfy the ‘control’ test, the employee might not be a servant if he assumes some or all of the economic risk under the contract (Ready Mixed Concrete v Minister Of Pensions 1967).

What actions by the employee constitute the ’employer’s business’?

The employee must be carrying out the employer’s business and not, in the words of Parke B in Joel v. Morrison (1835) 6 C&P 501, on a frolic of his own. In many cases, it will be obvious whether the employee is carrying out the employee’s business, but the higher courts are frequently called on to decide borderline cases. From these cases, the principle seems to emerge that there is a strong presumption in favour of vicarious liability whenever the employee is ‘at work’, even if he is carrying on work in a way which would be absolutely prohibited by the employee (see Limpus v London General Omnibus (1862)). However, there are limits to this presumption — deliberate wrongdoing by the employee is unlikely to be attributed to the employer (Keppel Bus Co v Saad Bin Ahmad 1974).

Special categories of defendant

There are various contractual relationships which appear to be employer-employee relationship but which, for policy or historical reasons, are not held to be so. There may be special rules of procedure, or limitations of liability, in these circumstances.

  1. Civil servants are technically not employees of the Crown, and the crown has traditionally not attracted vicarious liability for their behaviour. However, since the Crown Proceedings Act (1947), the Crown is now essentially liable vicariously in the same manner as other employers.
  2. Police Constables are not employed by their chief officers. Nevertheless, under the Police Act (1964), chief police officers can be vicariously liable on behalf of the local police authority for the acts of their constables.
  3. Although (as far as I know) there are no cases where this has been an issue, it is thought that the Church of England is not vicariously liable for the torts of its ministers; in general ministers of religion are not deemed to be employees of anyone.

Vicarious actions by employees

Since the abolition of the doctrine of common employment, it is not at all uncommon for the claimant in a vicarious liability action to be himself an employee of the defendant. If, for example, I am injured by a co-worker in the course of work, I could take action against my employer for his vicarious liability for my co-worker’s negligence, rather than against my co-worker directly. This won’t do much for industrial relations, but such a course of action may be attractive because:

  1. the employer will be insured (as a matter of law; it is compulsory);
  2. the employer will usually have deeper pockets than the employee.

However, the employer’s vicarious liability runs alongside whatever primary liability he might have. So even if a vicarious action would fail (perhaps because at the time of the accident I was acting in the course of business, but my co-worker was not) I can still proceed against my employer for breach of his primary duty to provide competent co-workers (see employers liability). My employer might also be liable for breach of statutory duty in some circumstances. In short, if I am injured by a co-worker in the course of work, I can proceed against my employer both vicariously and primarily.

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Definition Sources

Definitions for Vicarious Liability are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 7th April, 2020 | 11 Views.