This article is written by Anushka Singhal, a student from Symbiosis Law School, NOIDA. In this article, she discusses vicarious liability under torts in the United States. This article goes through the definition, the concept of joint and several tortfeasors, exemptions to liability and finally arrives at a conclusion. 

It has been published by Rachit Garg.

Introduction 

The word ‘tort’ is derived from the Latin word ‘Tortum’, which means ‘twisted’ or ‘crooked’ act, i.e., a deviation from straight or right conduct.  The main aims of the law of torts are: • To define an individual’s rights and duties in the light of prevalent standards of reasonable conduct and public convenience. • Compensation of victim(s) or their dependent(s). Vicarious liability under torts  makes a person liable for the wrongs of others and provides compensation to the victims. These three ways are- by ratification, by relation and by abetment. Liability by ratification is based upon the maxim- “Omnio Ratihabitio Retrorahitur Et Mandato Priori Oequiparatur”, which means that “every ratification of an act relates back and thereupon becomes equivalent to a previous request.” Herein, a person is said to be vicariously liable for the actions of others if he had ratified the act so done. Liability by relation arises out of the relationship existing between two people. While liability by abetment arises whenever a person abets another to do or omits to do some act. This article explains the concept of vicarious liability, when it can be revoked, discusses the difference between joint and several tortfeasors, liability in case of master-servant, independent contractor and elaborates on certain landmark judgments. 

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What is vicarious liability

The concept of liability by relation leads to vicarious liability. Vicarious liability is based on two maxims, “Qui Facit per alium facit per se”, i.e., he who acts through others acts through himself, and the other one is “respondeat superior”, i.e., let the master be liable. While a master is primarily liable for the actions of his or her servants committed while they were working for him or her, this is not the case for independent contractors.

Vicarious responsibility is an obligation imposed on one for the acts of the other based upon the relationship existing between them. While this responsibility’s historical or jurisprudential roots need to be clarified, it has been firmly established in common law for several centuries. The relationship between the two persons can arise by virtue of the following relations- 

1. Master and servant 

2.  Employer and independent contractor

3. Principal and agent

4. Company and director

5. Firm and partner

6.Guardian and ward.

Due to the concept of vicarious liability, both parties become joint tortfeasors, and both of them can be held liable for the loss caused to the victim. In simpler terms, vicarious liability can be explained as a liability on ‘no fault basis’. Vicarious liability is not codified but can be found in the Restatement of Torts, issued by the American Law Institute. 

When does vicarious liability set in 

The setting up of vicarious liability happens due to the following factors- control, compensation (deep pocket theory), deterrence, loss spreading, enterprise liability, and mixed policy. They are discussed as follows:-

Control

It is based on the maxim ‘respondeat superior,’ i.e., let the master/employer be liable. It is because the employer controls the activities of the employee. He is the one who sets the whole activity in motion. A servant does not act for his own benefit or out of his own discretion. He acts on the instructions of the master, thereby making him liable. 

Deep pocket theory

According to this theory, the employer is always in a better position to compensate the victim than the servant, as he has “deeper pockets,” i.e., is financially sound. The loss caused to the victim can be evenly distributed, and the victim should not suffer due to the servant’s incompetency in paying money. In the case of an employer-employee relationship, this theory is applied.  This loss distribution factor between employer and employee has been combined with the enterprise risk management argument. Enterprise risk management is based on benefits and burdens. “He who gets the enterprise’s profit should also bear the loss.” 

Deterrence

According to this theory, making the employer liable would act as a deterrent for both the employee and the employer. The employer would ensure that the employee strictly followed the instructions by making the work environment stricter and ensuring safeguards. The employer knows that he would also be liable for the acts of his employee, so he would ensure that there were no wrongdoings done. The same works for the employee, he would know that his employer would be liable for his wrongs, and thus he has to work in a better manner so as to escape facing the penalties imposed by the employer.

Loss spreading

One more reason for making the master/ employer vicariously liable is loss spreading. It can also be combined with the deep pocket theory. By imposing a duty on the employer, the weight of the accident is distributed among his customers and insurance. The same was properly explained in the case of  Escola v. Coca-Cola Bottling Co.(1944), wherein the Supreme Court of California held that making the employer liable for reducing the loss could easily compensate the victim as he could then obtain the cost from his customers by increasing the price for the service/ product. Even the employers are insured against any such losses and can obtain them from the insurers whenever they are made vicariously liable. An example of third-party insurance on vehicles can be taken to understand this concept. 

Tests to check whether there is an established employer-employee relationship

Following are some of the tests to check whether there is an established employer-employee relationship:-

Control

The master has direct ‘control’ over the servant. He decides the way of execution and gives other important instructions. This is not so in the case of an independent contractor who works according to his own discretion.

Nature of work

The independent contractors are given a one-time contract for the work while this is not so in the case of a master and a servant.

Hire and fire test

If a servant can be directly fired by the master, then the employer-employee relationship is confirmed. 

Mode of compensation

An employee is usually paid a monthly salary, unlike an independent contractor, who is generally paid a lump sum amount. 

Contract of service 

It helps in determining the nature of the relationship between the parties. One can easily decipher whether it is a master-servant, an employer-independent contractor, or an employer-employee relationship. 

When can vicarious liability be avoided

The concept of vicarious liability is not absolute. It can be avoided in numerous situations such as:-  

Frolic and diversion 

The scope and course of employment have to be understood to know what is frolic and diversion. Scope is the ambit within which you can work during your employment, and course is the duration during which you work. The ancillary activities you do while at work fall within the scope of employment. For example- A person ‘B’ has employed a driver to pick and drop him off from his office. Herein, if the driver needs to stop at the gas station to fill up gas and causes an accident on his way to the gas station, person ‘B’ would be liable as it is within his course of employment. It would be assumed that a driver had to do all the ancillary activities related to the maintenance of the car. But if this driver, after dropping off his employer ‘B’ at work, instead of going back to the employer’s home as directed by the employer, goes to the marketplace for his own work and on his way causes an accident, the master ‘B’ would not be held vicariously liable. In this situation, the detour is completely outside the scope and course of employment. 

Intentional torts

If a servant had intentionally done an act, he would be held solely liable. The master had never authorized such an act, so his vicarious liability would not sustain. For example- if a driver on duty intentionally hits a person out of revenge, the master would not be held liable.

Difference between joint and several liabilities

Joint tortfeasors are defined as “two or more individuals jointly or severally accountable in tort for the same bodily or property harm, whether or not judgment has been collected against all or some of them.” In the United States, joint tortfeasors are held jointly or severally accountable. As a result, the plaintiff may sue all of them or any one or more of them. If he secures a judgment against someone, he may sue another and acquire a judgment as long as the judgment is not fulfilled.

In joint liability, both parties are equally liable to pay. That means if a party pays the whole of the compensation, then the other party gets completely discharged from the liability.  While in several liability, both the tortfeasors have to pay in proportion to the damage caused by them. 

But both these concepts have been combined under ‘joint and several liability’. Herein, both the tortfeasors have to promise to pay the amount jointly and severely. The victim can make either both or one of the tortfeasors a party to the suit. 

In Kaeo v. Davis (1986), a Hawain case, the need to abrogate joint and several liability came up. Herein, as the liability of one part was ninety-nine percent and that of the other was just one percent, he was not made liable. Herein, a man named Davis was driving in an intoxicated condition. An accident was caused by him at a sharp curve on the road. The city was made liable due to its negligence in making and marking the curve properly. But the negligence of the driver was found to be extremely high, as he was drinking and driving. The Hon’ble Court pointed out that these are the cases where the problem arises. The difference in the liabilities makes it difficult for the courts to determine joint and several liabilities. The demand for reforms in joint and several liability has led to the release of the report of the Tort Policy Working Group on causation and other such reports. 

Is the liability the same for independent contractors 

A master is not held liable for the work of the independent contractor as he does not exercise his ‘control’ over the contractor. The master only assigns the work to the independent contractor, but the manner in which the work has to be performed is at the discretion of the independent contractor. There are certain exceptions to this norm, wherein an independent contractor is held similarly liable as a servant. The first is regarding unauthorized sub-delegation and the second is pertaining to an inherently hazardous activity.  So if a person ‘A’ is employed to do a certain work and he delegates it to some other person, without any authority, it would be unauthorized delegation. The master will also be held liable if he engages the contractor in an inherently dangerous activity like making explosive material. Herein, the first act acts an exception because the servant is acting beyond the scope of his employment. While when the master assigns an inherently dangerous activity to be conducted, he is himself doing an unlawful act and thus should be made liable. Even the Second Restatement of Torts § 409 of 1964 absolves an employer of all liabilities arising from the work of an independent contractor unless they fall into one of the two categories mentioned above. In Wilson v. Good Humor Corp., 1984, the Hon’ble Court held that since herein the ‘control’ is with the contractor himself, the employer cannot be made liable.

Vicarious liability for employees v. vicarious liability for independent contractors 

The vicarious liability of a master exists for his servants when they are acting in the course of employment. If the work is outside the course of employment, then the master is not liable. For example: if a servant is employed to drive the master, then if he does anything else unconnected with this work, the master has no liability. A servant is said to be acting in the course of employment if:

  • The master has authorized the wrongful act, or
  • The work is authorized, but the manner in which the servant performs it is unauthorized or wrongful. 

Therefore, in totality, it is the rule of thumb that the master will be accountable not merely for what he has authorized his servant to do but also for the manner in which the act has been authorized to be conducted. It is currently the law that anytime a servant performs anything that his employer has forbidden him to do, the conduct falls outside the scope of work. Prohibition is classified into two types: those that limit the extent or sphere of work and those that just influence or restrict the way of doing the act for which the servant is engaged. If a servant breaks a ban in the first category, his action is considered to be beyond the scope of his work, and the master is not held vicariously accountable. A violation of the first type of prohibition would make the act outside the course of employment, and there would be no vicarious liability for the master. But the second type of violation by the servant will still be in the course of work, and the liability of the master will still exist.

There are a few more situations in which the master would be liable- First, if the improper act is undertaken for the master’s advantage while the master is conducting his business, the master is culpable. Second, the master is accountable if the servant commits improper conduct while operating within the apparent extent of his authority, even if the act was performed for his own profit or the benefit of someone other than the master. The master is also not liable for the acts of the servant, which are only done because an opportunity is afforded to him due to his employment. For example- if a window cleaner steals an article from the room where he is doing the window cleaning work, his employer is not liable. 

The vicarious liability of an independent contractor is contrary to that of a servant. In general, an employer is not accountable for the torts committed by an independent contractor. An illustration can be if a contractor is employed to build drainage. And later on, that drainage blocked the drainage of the neighbor’s house, then the man who assigned the construction of the damage was not liable, but the contractor himself would be liable. There are two exceptions: where the employer retains control over the contractor and personally intervenes and becomes a party to the conduct that causes the damage, and if the item contracted to be done is improper in and of itself. In such instances, the employer is accountable to third parties who suffer damage as a result of the contractor’s or his subordinates’ wrongdoing. 

EmployeesIndependent contractors
Master is generally vicariously liable.Master is generally not vicariously liable.
Vicarious liability ends when the servant acts outside the scope of employment.Vicarious liability starts when it falls within certain exceptions.
Example- Mr. A is vicariously liable if his driver, on his way to pick him up, causes an accident.Example- If an independent contractor is assigned to build a house, then if an object falls upon a passerby while the construction is going on, then only the independent contractor will be liable.

Judicial pronouncements 

Stapleton v. Independent Brew Co., 1917

This case was regarding the accident caused to the plaintiff due to the defendant’s automobile, which was lent to the Detroit Axle Company and was being used by an employee of this particular company. The Supreme Court of Michigan held the defendant vicariously liable, saying that a lender should be sure of the competency of the person to whom he lends. 

Kuhn v. P. J. Carlin Constr. Co., Inc.,1935

Herein, a person died due to the sinking of a steamship. The plaintiff, who was the administratrix of the deceased in the case, sued the defendant company Carlin Co. He alleged that the defendant company had the knowledge that the boiler of the steamship was in a dilapidated condition and was unfit for use. The Court held that there was no notice of such defect. If the master had noticed the defect and then also turned a blind eye to the problem, he is vicariously liable; otherwise, he can escape the liability. In this case, the master had no notice of the defect, so he was not held liable when the case went from the New York court to appeal. 

Macon & A. R. Co. v. Mayes, 1873

This case again affirmed the vicarious liability of an employer. Herein, the plaintiff lost one of his legs due to the negligent conduct of the defendant in driving one of his steam cars. The plaintiff herein was employed to lay down tracks but on the unfateful day, he was acting as the fireman as the person who was employed as the fireman was sick. While doing such duty, he was injured by one of the steam cars. The employer was held liable to the plaintiff in this case as the man who was driving the engine was his employee. 

Conclusion

The concept of vicarious liability helps provide compensation to the victims. If the servant is made liable, then he might not be able to pay the victims, and the whole social welfare concept might collapse. It makes a person liable on ‘no fault basis’ and helps in providing adequate compensation to the aggrieved person. This law has helped numerous victims and has even made the state liable, at times, for the wrongs of its servants. It is an important part of tortious liability, which has evolved over time with an expansion in the definition of an independent contractor, joint, and several tortfeasors. 

Frequently asked questions (FAQs) 

What is vicarious liability?

Vicarious responsibility is an obligation imposed on one person (B) for the torts of another (A) in cases where B has not done any legal wrong. 

What is the difference between scope and course of employment?

The course of employment is much broader than the scope of employment. The scope of employment is generally the work that is connected with the employer directly. 

How is the liability of an independent contractor different from a servant?

A master is not vicariously liable for the actions of an independent contractor except in certain circumstances, while the same is not true in the case of a servant. 

References 

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