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Master's Indemnity: The concept of Vicarious Liability

In Law of Torts, the person is liable for his own wrongful acts but there exists a different concept also. When a person is held liable for the acts of another person, then such liability is termed as vicarious liability. The said concept imposes a strict liability on such person who was not actually involved in the act.

There are two legal maxims in this context:
  1. Qui facit per alium facit perse:

    The law presumes that the act of servant is the act of master. It is the presumption in the eyes of law. The master holds the authority, therefore he is responsible for the acts of his servant.

  2. Respondeat Superior:

    in simple words we can say that 'let the superior be held liable for the acts of subordinate'. The subordinate term thereby includes, any person who has the authority to give directions to his junior.
For example, the principle is superior to his agent, the master is superior to his servant and employer is superior to his employee.

Sir Fedrick Pallock has said:
'I am responsible for wrongful acts of my servant or agent because he does my act and therefore it is my duty to see that he must do my act keeping in view the security of other.'

Vicarious Liability arising out of special relationships:

Master and Servant:

The master is a person who holds an absolute power to control and direct his servant. So, in master and servant relationship, the master is liable for the acts of his servant provided, such an act is done within the course of employment. That is to say, the act done comes under the purview of the responsibilities given to him in his employment.

Liability of master for the acts of independent contractor:

Independent contractor is a person who is hired for a specific duration of time and for completing a specific task. The master do not tell him 'how the work is to be done' instead only tells him 'what work is to be done'. So, independent contractor acts in his own way, his actions are not under the control of his superior.

Whether the contractor is independent or not?

Control of job: If it is the discretion of a contractor to work in his own way, then he is an independent contractor. On the other hand, if the absolute power is in the hands of the principle and he orders him, the manner to do the work, then he is not an independent contractor.

Supply of material: Independent contractor uses his own machinery, material and specific skills to complete the work being assigned to him but a servant does not do so. Moreover, the payment is given to an independent contractor after the completion of a particular task whereas the servant is paid on a regular basis.
  • The employer is not liable for the acts of an independent contractor.

The employer is liable for the acts of independent contractor in exceptional cases:
  • Provided the work involves 'inherently dangerous activity'
  • If the employer authorizes the employee to do some illegal/unlawful activity and ratifies the same, then also employer can be held liable.
  • If employer hands over some extra hazardous work.

What is inherently dangerous activity?

The activities/work in which there is a high possibility of risk of injury to any person. If the nature of activity is such that, the injury to any one is highly probable then such activities can be termed as inherently dangerous activity. For example explosives, hazardous substances, construction, hanging sodium lamp on highways etc. so all these activities have very high chances to injure the other person therefore in these cases the principle is held liable for the acts of an Independent Contractor.

X hired a crane and a driver for the purpose of loading heavy goods. Y was the owner of the company who supplied such crane and driver. In the process of loading and unloading, Z got injured. Y would be held liable because he didn't know 'how the work is to be done' and also he was a hired servant (Independent Contractor for X). The liability shall be owned by Y in the said case. (Mersey Docks and Harbour Board v. Coggins & Griffith Ltd.)

If the A authorizes his driver B to drive at higher speed and negligently injured a pedestrian then A will be held liable. Because master has himself authorized him to do an unlawful act. Also the said act was done within the course of employment.

A has hired a few laborers for completing his renovation work of his house. Suddenly, a brick fell out of his hand and injured the neighbor of A. Here, who will be held liable? The master would not be held liable because firstly, it was a sheer accident (Neither master nor servant can be held liable in accidental injuries); secondly, the laborers are independent contractors who own special skill to work. So master cannot direct them 'how the work is to be done'. So the laborer would be held liable for his negligence.

In the case of Morris v. C. W. Martin and Sons Ltd., the fur coat was given to the defendant for cleaning but the servant stole the coat in the course of employment so, the plaintiff sued. The court held defendants liable as the theft was done within the course of employment.

The master would be held liable if his servant stole some goods which were entrusted to him by the master. The notable point is the entrustment of goods to the servant by the master.

  • Principle and Agent:
    When one person legally appoints another person, the principle of agency is created. The principle authorizes an agent to do a certain work so, on his command the agent accomplishes the work.

  • Company and Directors:
    The relationship of company and directors resembles that of principle and agent. Directors are the agents of the company. So, company would be held liable for the acts of directors. The act of directors is an act of company. A director will be liable for tortious liability if he actively participates in the act or authorizes or instructs anyone to commit such an act.

  • Firm and Partner:
    In the case of Lloyd v. Grace, Smith and Co. (1912), the managing clerk of the firm committed fraud against a lady client and transferred her immovable property in his own name. The firm was held liable for the fraud because such an act was committed within the course of employment and the ostensible authority was given by the firm to the managing clerk. So if he has committed a fraud, the firm would be held liable.

Difference between hired taxi driver and an employed driver:

The hired taxi driver or if we book online taxi, in both the cases the driver is an independent contractor because we have hired him for the completion of a particular task. In another case, if we have employed the driver then we have full control and authority over him and he is not an independent contractor. So, in case of personal driver, master will be held liable but in case of independent contractor, master does not owe any liability.
  • The notable point is that, the incidents of accidents and misfortune are excluded.
  • The master would be held liable for all the unlawful acts authorized by him.

The concept of vicarious liability is very different and it totally depends upon the facts and circumstances of the case. We cannot say, that superior is always liable for his subordinate's act. The liability is not exhaustive. But if the essential requirements are satisfied (as mentioned above) then master cannot escape from his liability. So, the master is vicariously held liable for the acts of his servant.

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