Doctrine of Vicaious Liability

15 Case laws on Doctrine of Vicarious Liability

Topics to be covered in this Article: Doctrine of Vicarious Liability

Topics Covered:

  • What is Doctrine of Vicarious Liability & its Reason
  • Rule of Vicarious Liability
  • Principal & Agent
  • Partners
  • Master & Servant
  • Hospital & Doctors
  • Vicarious LIability of the State
  • Case Laws

Doctrine of Vicarious Liability

The doctrine of vicarious liability is a principle in law where one person is held liable for the wrongful acts of another, even though they may not have directly committed the act. This is commonly seen in employer-employee relationships, partnerships, and principal-agent situations, Hospital-Doctor/staff. It is also applicable on the state -it’s official in most of the cases.

Rule of Doctrine of Vicarious Liability:

Rule of Vicarious Liability

The fundamental rule of vicarious liability is that a person can be held legally responsible for the wrongful acts of another if there exists a special relationship between them, such as employer-employee, principal-agent, or partners in a firm. The liability arises even when the person held responsible has not personally committed the wrongful act.

Doctrine of Vicaious Liability

Reasons for Doctrine of Vicarious Liability

  • Qui facit per alium facit per se (He who acts through another is deemed to act in person)

    • This Latin maxim means that if a person delegates their work or duties to another, they are still responsible for the actions performed on their behalf.
    • In the context of vicarious liability, a principal (such as an employer) is held liable for the wrongful acts of their agent (such as an employee) if the act was committed within the scope of their authority.
    • Example: If a company instructs an agent to sell defective products, the company cannot escape liability by claiming that the agent, and not the company, made the sale.
  • Respondeat Superior (“Let the Superior Answer”)

    • This principle holds that an employer is responsible for the wrongful acts of their employees if the act was done within the scope of employment.
    • The reasoning is that since the employer benefits from the work of the employee, they should also bear the consequences of any wrongful acts committed in the course of that work.
    • Example: If a hospital nurse commits medical negligence while treating a patient, the hospital can be held vicariously liable for the nurse’s actions.
  • Financially Capable (“Deep Pocket Theory”)

    • This theory justifies vicarious liability on the basis that employers or large corporations are financially capable of compensating victims, whereas individual employees may not be.
    • It ensures that justice is served by providing the injured party with adequate compensation, even if the wrongdoer personally lacks the resources to pay.
    • Example: If a taxi driver causes an accident due to negligence, the taxi company is more capable of paying damages than the driver.
  • Employer Has Set the Whole Thing in Motion

    • The employer hires the employee, provides them with the tools and resources, and defines their duties. Since the employer benefits from the employee’s work, they must also take responsibility for any harm caused in the process.
    • The idea is that wrongful acts committed in the course of employment are indirectly the result of the employer’s decision to engage in that business.
    • Example: A security company that hires guards to protect properties can be held liable if a guard assaults someone while on duty.
  • Matter of Public Policy

    • The doctrine of vicarious liability serves a broader social purpose by ensuring fairness, accountability, and the protection of victims.
    • It promotes careful selection, training, and supervision of employees by employers.
    • It also prevents injustice by ensuring that victims are compensated by those who have control over the wrongdoers.
    • Example: Holding a school liable for a teacher’s misconduct ensures that educational institutions maintain strict hiring and monitoring policies.

Chief forms of Doctrine of Vicarious Liability:

The doctrine of vicarious liability holds one party liable for the wrongful acts of another due to their legal relationship. The chief forms in which this doctrine is recognized include:

(i) Principal Agent relation:

The principal-agent relationship is a key area where vicarious liability applies. When an agent commits a wrongful act while performing their duties within the scope of their authority, the principal is held liable for those acts. This is because the agent is acting on behalf of the principal, and the law treats the principal’s actions and responsibilities as extending to the agent’s conduct.

The liability is joint and several, meaning that the injured party can sue either the agent, the principal, or both for damages. The principal cannot escape liability by claiming ignorance of the agent’s actions.

Case Laws on Doctrine of Vicarious Liability (Principal Agent relation):

Case Law: (1) Lloyd v. Grace, Smith & Co. (1912)

Facts of the Case:

  • The plaintiff, Mrs. Lloyd, owned some cottages and went to a law firm, Grace, Smith & Co., for legal advice on selling them.
  • A managing clerk, acting as an agent of the firm, fraudulently convinced her to sign a gift deed instead of a sale deed, thereby transferring ownership of the cottages to himself.
  • Later, the clerk misappropriated the property, causing Mrs. Lloyd financial loss.

Issue:

  • Was the law firm (the principal) liable for the fraudulent actions of its managing clerk (the agent), even though the firm was unaware of the fraud?

Judgment:

  • The House of Lords held the law firm liable for the fraudulent actions of its clerk.
  • It reasoned that the clerk was acting within the scope of his employment as an agent of the firm.
  • Even though the principal (the law firm) had no direct involvement in the fraud, it was responsible for the acts of its agent when performed in the course of business.

Legal Principle Established:

  • If an agent commits a wrongful act while acting within the ordinary scope of their employment, the principal is vicariously liable, even if the act was fraudulent or criminal.
  • The victim does not need to prove that the principal had knowledge or direct involvement in the wrongful act.

Case Law: (2) State Bank of India (SBI) vs. Shyama Devi (AIR 1978 SC)

Facts of the Case:

  • The plaintiff (Shyama Devi) had an account with State Bank of India (SBI).
  • Her husband gave some cheques to a friend, who was an employee of the bank, with the instruction to deposit them into her account.
  • Instead of depositing the cheques, the bank employee misappropriated the money for personal gain.
  • When Shyama Devi did not receive the credited amount, she sued the bank (SBI) for vicarious liability, claiming that the employee’s wrongful act was committed in the course of employment.

Issue:

Was the bank vicariously liable for the misappropriation committed by its employee?

Judgment by the Supreme Court:

  • The Supreme Court ruled in favor of the bank (SBI) and held that the bank was not liable for the wrongful act of its employee.
  • The reasoning was that the employee was not acting in the course of his employment when he took the cheques from the plaintiff’s husband.
  • Instead, he was acting in his private capacity as a friend of the plaintiff’s husband.

Case Law: (3) Omrod v. Crossville Motor Services Ltd. (1953),

 the court held that when a person allows someone else, even a friend, to drive their vehicle for their own benefit or purpose, the driver is considered an agent of the owner. In this case, the owner of a car asked his friend to drive it on his behalf, and while doing so, the friend got into an accident with a bus. The court ruled that since the friend was not driving for personal reasons but rather on behalf of the owner, the owner was vicariously liable for the accident. This case established the principle that vicarious liability is not limited to employer-employee relationships but can also apply in personal situations where someone is acting as an agent for another.

(ii) Partners:

each partner acts as both a principal and an agent of the firm and the other partners. This means that any act done by one partner in the ordinary course of the firm’s business is binding on all the partners, just as if the firm itself had acted.

Under the law of agency, an agent acts on behalf of the principal and can create legal obligations for them. Similarly, in a partnership, when a partner enters into a contract, takes a loan, or commits a wrongful act while conducting the firm’s business, the entire firm (including all partners) is held liable for that act. Even if a partner is unaware of or did not personally approve the act, they can still be held responsible as long as it falls within the scope of the partnership’s business.

For example, if a partner in a trading firm signs a contract to buy goods on behalf of the firm, all partners are bound by that contract. Likewise, if a partner commits fraud in the course of business, the entire firm can be held liable. This principle ensures trust and accountability in partnerships while protecting third parties who deal with the firm.

case Law:

Hamlyn v. Houston & Co. (1903)

Facts of the Case:

  • A partnership firm named Houston & Co. had two partners.
  • One of the partners bribed an employee of another company to obtain confidential information, leading to a breach of contract.
  • The wrongful act was done for the benefit of the firm in the course of business.
  • When the fraud was discovered, the other partner claimed that he had no knowledge of the bribe and argued that he should not be held liable.

Issue:

  • Could the innocent partner be held liable for the wrongful act committed by the other partner in the course of business?

Judgment:

  • The court held the entire firm liable, meaning both partners were responsible for the wrongful act.
  • The reasoning was based on the law of agency, which governs partnerships.
  • Since partners act as agents of the firm and each other, any wrongful act done by one partner in the course of the firm’s business binds the entire firm.

(iii) Master & Servant Relationship

  • If servant does a wrongful act, in the course of the employment, master is liable for it along with servant. 

Condition: 

  • Wrongful Act
  • Wrongful act was done while he was engaged in the course of employment.

There is a difference between servant and independent contractor.

Test: Existence of a right of control over the agent in respect of the manner in which his work is to be done. 

  • Independent Contractor is one who is his own master.

 

Case Laws on Doctrine of Vicarious Liability (Master Servant Relation):

  • (5) Morgan vs. Incorporated Central Council (1936): person fell down from open lift shaft and got injured. Defendant entrusted this job to independent contractor, was not held liable.
  • (6) B. Govindarajulu vs. M.L.A. Govindaraja AIR 1966: Motor lorry (truck) was given for repair, employee of the workshop was driving and met an accident. Held: was working as independent contractor and liable. 
  • (7) Devinder Singh v. Mangal Singh AIR 1981: Truck for repair, same case.
  • (8) Rama Tularam vs. Amichand (1988):(Bombay High Court: different stand.) ~ on the basis of law of agency.

(iv) Hospitals & Doctors/Staff

Hospitals and healthcare institutions can be vicariously liable for the negligence or wrongful acts of their doctors, nurses, and other medical staff under the principle of “Respondeat Superior” (Let the Superior Answer). This means that if a doctor or medical professional commits a wrongful act within the scope of their employment, the hospital or clinic can be held legally responsible for the consequences.

Hospitals can be held liable for their doctors’ negligence when the doctor is an employee or when the hospital fails in its duty of care. This ensures that patients receive compensation for medical errors and promotes higher standards of healthcare.

Case Laws:

(9) Gold v. Essex County Council (1942)

In this case, a hospital authority was held liable for the negligence of its staff. The patient suffered harm due to improper treatment given by the hospital-employed medical staff. The court ruled that since the hospital had a duty to ensure competent medical care, it was vicariously liable for the negligence of its employees. This case reinforced the principle that hospitals are responsible for their staff’s actions, even if individual doctors or nurses were directly at fault.

(10) Bolam v. Friern Hospital Management Committee (1957) – The Bolam Test

This case established the Bolam Test, which is used to determine medical negligence. The patient, Mr. Bolam, underwent electroconvulsive therapy (ECT) at a hospital and suffered fractures because he was not given muscle relaxants. He sued the hospital for negligence. The court ruled that a doctor is not negligent if they follow a practice accepted as proper by a responsible body of medical professionals. If a doctor’s actions align with accepted medical practice, they cannot be held liable for negligence. The Bolam Test remains a key legal standard in medical negligence cases worldwide.

(11) Jacob Mathew v. State of Punjab (2005)

This Indian Supreme Court case clarified the criminal liability of doctors for medical negligence. A patient died due to a lack of proper emergency facilities at a hospital, and the doctor was charged with criminal negligence. The court ruled that a doctor can only be held criminally liable if their negligence is gross or reckless, not for mere errors of judgment. The ruling emphasized that medical professionals should not be harassed for every mistake, as medicine involves risks. This case balanced patient rights with doctor protection and influenced medical negligence law in India.

(v) Vicarious Liability of the State

Article 300 states that the Government of India or a State Government can sue and be sued in the name of the Union of India or the respective State. This means that the government can be held vicariously liable for the wrongful acts of its employees, similar to an ordinary employer, except in cases where the act is a sovereign function.

Case Laws:

(12) P.V. Rao v. Khushal Das (1949) – Liability Except in “Acts of State”

In this case, the government was held liable for the wrongful acts of its employees, except when the act in question was an “Act of State”. An Act of State refers to actions performed by the government in its sovereign capacity, such as war, defense, or foreign relations, which cannot be challenged in court. However, if a government employee commits a tortious act in a non-sovereign function, such as providing public services (e.g., railways, postal services, or municipal activities), the state can be held liable.

(13) Rup Ram v. Punjab State (1961) – Liability for Tortious Acts of Servants

In this case, the Punjab government was sued for the wrongful act of its servant, and the court ruled that the state is liable for the negligence or misconduct of its employees, just like a private employer. The judgment emphasized that when the state acts as an employer, it is subject to the same rules of vicarious liability as any other employer. However, the state would not be liable for acts classified as sovereign functions, which involve governance, law enforcement, or military operations.

 

 

You May Also Like:

Leave a Reply

Your email address will not be published. Required fields are marked *