Liability of Principal for Agent's Torts

Question 1

What are the two main vicarious liablity theories?

Answer 1

1. Respondeat Superior OR
2. Apparent Authority

Vicarious liability is derivative meaning that if the agent is not liable, the principal cannot be liable

Question 2

When can a principal be directly liable for the torts of their agent?

Answer 2

1. A principal may be directly liable if she gave the agent actual authority to commit the tort or ratified the tort.
2. A principal also may be liable for her own negligence in hiring, retaining, or supervising an agent if the principal knew or should have known of the agent’s dangerous or careless proclivities.

Question 3

When is a principal liable under the respondeat superior theory?

Answer 3

Under this theory, a principal is liable for the torts of an employee committed within the scope of the employment.

The principal is generally NOT liable for actions of independent contractors.

Question 4

How do independent contractors differ from employees?

Answer 4

• The principal retains the right to control the manner in which an employee performs their work.
• A principal does not reserve/have a right to control the manner in which work is performed by an independent contractor.

Question 5

What are the main Right to Control Factors to Examine to Determine if dealing with independent contractor or not?

Answer 5

a) Characterization by Parties: The way the parties characterize their relationship (employer-employee vs. principal-independent contractor) is significant, but not dispositive.

b) Distinct Business: A person who has her own business or occupation is more likely to be an IC.

c) Customs of Locality Regarding Supervision: If the work is usually performed under supervision of the principal, more likely to be employer-employee

d) Skill Required: Where great skill is required, the individual is more likely to be deemed an IC.

e) Tools and Facilities: If the principal supplies the tools and facilities, more likely to be employer-employee.

f) Basis of Compensation

• On Time Basis — More likely to be employee
• On Job Basis — More likely to be IC

g) Period of Employment

• Definite and/or Short — More likely to be IC
• Indefinite and/or Long — More likely to be employee

h) Business Purpose

• Furtherance of Principal’s Business — More likely to be employee
• Nonbusiness Purpose — More likely to be IC

i) Distinct Business: Person who has their own business or occupation is more likely to be IC

Question 6

When will a principal be liable for the actions of an independent contractor?

Answer 6

Principle will be liable for acts of IC when:

1. Inherently dangerous activities are involved
2. Nondelegable duties have been delegated, OR
3. The principal knowingly selected an incompetent IC

Question 7

What are the 3 factors to examine whether the employee acted within the scope of employment?

Answer 7

1. Whether the employee’s conduct was similar or incidental to that which employee was employed to perform
2. Whether the employee’s conduct was substantially removed from the authorized time and space limits of the employment
3. Whether the conduct was actuated at least in part by a purpose to serve the employer.

Frolic vs Detour from Employer’s Direction

• Detour or Small Deviation — Within the scope of employment
• Frolic or Major Deviation— If it requires substantial deviation, the action is beyond scope of employment

Question 8

When are intentional torts within scope of employment?

Answer 8

1. Physical Injuries (force is authorized; promotion of employer’s business; friction generated by employment)
2. Fraud: The principal will be liable for an agent’s misrepresentations if the agent had authority (actual, apparent, or inherent) to make statements about the subject matter involved.
3. Ratification: If the principal had knowledge of all material facts, the principal will be liable for an agent’s conduct that is ratified by the principal

Question 9

When is a principal liable under the theory of apparent authority for an agent’s torts?

Answer 9

A principal is liable when an agent appears to deal or communicate on behalf of the principal and the agent’s apparent authority enables the agent to:

1. Commit a tort OR
2. Conceal its commission.