Vicarious liability is that legal concept in torts which allows one party to be held liable, for the actions of another despite having no active involvement in that incident. The law of tort attaches a liability to a principal for the wrongful act of the agent on the ground that it’s the principal who has selected the agent. Agency is defined as the consensual relationship in which the principal appoints the agent to act in his behalf, primarily to make contracts between the principal and the third party. Example of principal-agent relationships include that of an attorney and his client, a contractor hired for repairs or an investment advisor for a businessman.
The liability between a principal and agent is joint as well as several. The injured party can sue only the principal or only the agent or both. For an agent to make the principal legally responsible for a wrongful act, it is necessary to show that:
• The act was committed by the agent in the course of his employment, even if the principal did not participate directly in the act or authorise it,
• That the act was beyond the scope of the agency, and was expressly ratified or authorised by the principal.
For example, X is a contractor who hires Y, a sub-contractor. Y is found performing the job inadequately. The contractor is held liable for the subcontractors actions, since he employed him.
The Bombay Court held that the test of agency is not physical control but the right to control. When a person does an act with the approval of the principal and that act specifically concerns the principal, he will be held liable for the agents actions. Even if the principal has the right to control, and not actual control of that particular act, he would be held responsible.