The principles of vicarious liability and how it applies to the employer wishing to start his own business

In running any business, the legal concepts are very important as they help to avoid liability that may result from unlawful acts. There are several laws governing business activities. One of the principles that government various business activity is the principle of vicarious liability. Generally, the legal concept of vicarious liability tends govern the accidents by giving the employer some financial interest in accidents that happen in his business (Cheeseman, 2009). In this regard, it gives responsibility to the employer to cater for any loss that happens to the employee while discharging his mandate. The principle of vicarious liability recognizes that the wealth of the employer should have some interest in protecting the damages that may arise while the employees are discharging their mandate.

The expression of vicarious liability signifies liabilities which the person running his own business may incur to the employee for damage caused by the employee for negligence caused by the employer. It is not necessarily that the employer running his own business might not have participated in any way in the commission of the tort, nor than a day owed in law by the employer to the employee shall have been broken (Mallor et al, 2015). Generally, whatever is required is that the employer should stand in particular relationship to the employee and that the tort from the employee should be referable in a certain manner to their working relationship. In most cases, the concept of vicarious liability arises from the contract of service with the commonest instance being the liability of the master for the torts of his servants.

For the principle of vicarious liability to arise, there must be a clear relationship between the two people in their working contract (Cheeseman, 2012). It is worth noting that vicarious liability does not arise from the contract of services (independent contractor), but it arises from the contract of services. In this regard, the person running his own business is liable for torts committed by the servant, but is not liable for the tort committed by independent contractors.

The ruling in Short v. J & W Henderson Ltd illustrated that a contract of service is indicated by four indications. First, the master must have the power of selection of his servant without any undue influence from anybody or any institution (Cheeseman, 2009). Secondly, the master must have the power to pay wages and other remuneration of the service done by the employee. Third, vicarious liability applies when the master have some levels of control in determining how the work needs to be done. Finally, the principal of vicarious liability applies when the master have the right to retain and suspend the employee at will. When all these four conditions apply, then a person running his own business is liable to the principle of vicarious liability. These four principles help to understand whether there exists a master and servant relationship within any business set up.  However, the four indications are not conclusive as other principles may also apply. The ruling in Market Investigations Ltd v. Minister of Social Security also shed more light on other relevant considerations in determining whether the principle of vicarious liability exist between the master employee relationships. In this case, it was determined that some level of control from the master on the employee makes him liable in accordance to the principle of vicarious liability (Cheeseman, 2012). However, other factors must also be considered such as whether the employee hires his own equipment while discharging his duties and also whether he hires his own helpers. In addition, the courts also look at the degree of financial risks the employee takes and the degree of responsibility the employee is accorded in the management. Also, this case highlighted that they need to assess how far the employee stands to benefit from the sound management in the performance of his task in applying the principle of vicarious liability. When dealing with professional or men of particular skills, then the control test is not conclusive in determining the level of master servant relationship.

The difficult case with vicarious liability occurs with hired servants (Mallor et al, 2015). For example, when X is the general employer of Y, but C enters into agreement with X to make temporary use of the services rendered by B. This set up brings challenges in interpreting vicarious liability if Y commits a tort against a certain individual.  It is always a challenged to decide who is vicarious liable since somebody somewhere must be liable between the two persons. The ruling in Mersoy Docks and Harbour Board v. Coggins and Griffith Ltd helps to explain who is responsible in such arrangement. In this case, the person X had employed Y to drive his crane. However, X let his crane to Z, with the contract letter stipulating that Y be the servant of Z, but was remunerated by X. Also, the contract letter stipulated that only X had the power to dismiss the crane driver. During the course of his activities, Y injured somebody with the crane in a negligent way. However, the accident happened when Z was in direct control of the activities and operations of Y, but he had no power of how the crane is operated and manipulated to carry out its activities. The matter was taken to court to determine who was vicariously liable for the tort committed by the driver of the crane between the two persons. In their ruling, the judges held that X, being the general manager and the permanent employer of Y was vicariously liable for the torts committed by Y. In their ruling, the judges agreed that there is a strong presumption that a servant remains to be the servant employer despite being the servant of the hirer. The question of whether the employer or the hirer is liable depends on several factors that are determined during the ruling. Generally, courts give heavy consideration to the paymaster and the person having the power to dismiss. In relation to this, any person wishing to run his own business must hire their employees with lots of caution as they may be liable for various torts committed when their employees are hired to other entities (Guerin, 2013).

The law of vicarious liability also establishes whether the employer has authorized the commission of the tort (Cheeseman, 2012). In most cases, the law will attribute to a man the conduct of another being, whether human or animal whether he has instigated the tortious act. The law of vicarious liability operates such that he who has instigated or made another party to commit a tort is deemed liable to have committed the tort. The principle of vicarious liability applies to unlawful acts as was evident in Ellis v. Sheffield gas Consumers Co. In this case, the defendant employed a third party to open the trenches along the streets to lay gas pipes. The aftermath was that stones were carelessly left across the footpath that later injured the plaintiff. In the courts, the judges ruled that the defendant was liable as the action was illegal and thus a public nuisance. The ruling would have been otherwise were it an act of illegal activity. This provides an important lesson to a person wishing to start their own business not to make their employees engage in illegal activities as this would make them liable for their misdeeds.

According to Hannigan (2012), the principle of vicarious liability also applies to strict liability. The principle in Rylands v. Fletcher established that an employer can be liable for the acts of independent contract if it results from the torts of strict liability. When it comes to strict liability, the employer will be liable even when the tortious act is caused by an independent contractor.

The principle of vicarious liability can also apply to independent contractor when it is established that the tortious acts resulted from negligence of the employer. In this regard, vicarious liability will apply when the employer is careless and negligence in employing independent contractor. Therefore, employer needs to provide enough and visible caution of risk in a contract where there is reasonable risk to guide the work of the independent contractor (Mallor et al, 2015). The failure by the contractor to provide caution in the contract where there is risk of harm is taken to make the employer liable for the tort of the contractor. The case in Robinson v. Beaconsfield Rural Council illustrates an element of personal negligent on the part of the employer that made him liable for the independent contractor.

There are several reasons why legal experts supported the principle of vicarious liability. One of them being that the employer has deep pockets that result from the hard work of his employees (Cheesam, 2012). Also, the employer makes profits from activities within the workplace that such profits should also be used to cover the shortcomings in the workplace. In addition, the employer can access some vital resources such as insurance claims that can be used to offset some costs in such scenarios. Therefore, he is better placed to cater for the expenses that result any damages within his enterprising environment. In addition, the principle of vicarious liability was developed to ensure that the employers develop proper working conditions with reduced incidences of accidents or other harmful incidences (Mallor et al, 2015). Since the employer is the overall controller of the working conditions, placing liability on him encourages him to encourage proper working conditions within his workplace.

References

Cheeseman, H.R. (2012). Business Law 8th Edition. Pearson

Cheeseman, H.R. (2009). Business Law 7th Edition. Pearson

Hannigan, B. (2008). Company Law. London: Oxford Unviversity press.

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