Vicarious Liability in Partnership

The principle of Vicarious liability whether dealing in law of torts or partnership laws or to impose a criminal breach liability on the wrongdoer is well settled and stated in exact principles of law. The general rule of no one can be punished or held liable for someone else’s acts or omission is exempted in the rule of vicarious liability. The sole purpose of imposing vicarious liability is to impose responsibility as well as equal liability if some breach of trust, contract, negligence arises.

Vicarious liability or obligation is recognized by law to safeguard the interest of the employees or the servant where a relationship of benefit or interest because of other’s work exist. It encourages accident or breach prevention as all the activities of the employees are deemed to the act done by the employer himself. It imposes a sense of responsibility and minimizes the lack of accountability.

Introduction

The theory of Vicarious Liability is a profound concept in the field of law. In the law of tort, the doctrine of vicarious liability plays a significant and a major role in case of liability of employee and employer comes into the picture or where either party or the third party seeks damages. In partnership laws and criminal offenses thereby, the doctrine of vicarious liability comes into the picture which imposes the liability to seek damages or compensation.

This article proposes the principle of vicarious liability which shall attempt to explain the legal maxims that govern the status of liabilities in different aspects. The main premise of the article will be to highlight the liability as imposed vicariously on partners and their relationship, proceeding with certain relevant case law which provides an in-depth overview of the vicarious liability in a partnership. 

Concept of Vicarious Liability

To understand the concept of vicarious liability we can say that generally, a person is liable for his wrongdoing and does not bear any obligation for the wrong done of any other person. However, the doctrine of vicarious liability is that the liability of one person may arise for the act or omission of another person. This concept of making another person liable for one’s actions is making the former vicariously liable for the act done. However, it is necessary that to make another person liable for other’s acts done, there must be some kind of relationship between the two and the wrongful act or omission that is done must be concerning the two and connected to them in a certain way.

General examples of such liability will be- Liability of principle for the tort of his agent, Liability of partners of each other torts, The company and the directors, master and servant relationship, owner, and independent contractor, etc.

In the case of Bartanshill coal co. v. McGuire[1], the words of Lord Chelmsford, “it has been established by law that a master is liable to third persons for any injury or damage done through the negligence or unskillfulness of a servant acting under his master’s instructions. In such instances, the principle will be liable for the act done by his agent.

Who Are the Partners in A Firm?

This article will deal with the aspect of vicarious liability as imposed on the partners of a firm. But to comprehend the entire concept of vicarious liability in a relation of the partnership in firms and companies we need to understand that who all are eligible to be called as partners of the firm.

A partnership firm or a company is a type of business in which a group of people also known as the partners come together with equal or partially distributed shares to start setup. However, a partnership does not have a single legal entity and all the partners share and have equal say in profits or losses or any other liability.  To become a partner of any firm certain requirements which are necessary by which a person can enter a partnership according to the law.

Partner and Partnership

Each partner of the firm is known to be the agent for the other in partnership. The act of one partner is called an act of all.

Therefore, there exists a mutual and equal responsibility and liabilities between the partners in a partnership firm. It can be said that all the partners are held liable for the wrongdoing of one partner of a firm to the same as the guilty partner.

In the landmark case of Hamlin v. Houston & Co.[2], one of the partners of the partnership firm bribed the plaintiff’s clerk to give some confidential information. It was held by the court since one partner of the firm breached the contract and being in a partnership, it makes every other partner jointly and severally liable for the breach of contract.

Partners Liability to the Third Party

Partner’s Relationship

The relationship of partners in a firm is similar to that of the relationship between principal and agent. For the tort committed by one partner of the firm makes all the partners liable for the damages. The liability in case of a partnership, each partner is jointly and severally liable.

Under the Partnership Act, 1932, a wider and comprehensive concept of partners and their liabilities are explained. Section 4 of the Act deals with the definition of a partner, proceeding with section 6 which determines the existence of a partnership, and lastly, section 13 of the Act explains the rights and their liabilities thereof.

As said, in a partnership firm all the partners are equally liable for the acts done on the behalf of other partners. Hence, in partnership all the partners all vicariously liable for the negligence committed by one partner. Consequently, all the partner’s in the partnership may be liable to pay damages for the loss or injury of the client.

Relevant case laws

In the case of Northampton Regional Livestock Centre Company Ltd. v. Cowling[3], a partner jointly and severally for his partners’ breach of fiduciary duty under section 10 of the Partnership act,1890. It was held by the court that even the partner who did not do anything is liable for the breach of the conduct of his partner as they are jointly and severally liable.

In another case of Smt. Vunna Visalu v. the State of A. P[4], it was stated that every partner is liable for “an act of the firm”. ‘Act of a firm’ has been defined to mean ‘any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm’. This is the civil liability of the firm and its partners.

In the case of Redman v. Walter[5], the plaintiff, Redman, employed the law firm. Macdonald, Brunsell & Walters, to prosecute a lawsuit.  He filed a suit with “Macdonald, Brunsell & Walters” as his attorneys. Because of the failure to attend the trial for 5 years, Redman instituted negligence against the partnership and the court held and provided a better version of the understanding of vicarious liability in partnership and said that all the partners are bound by the act of one another, which is within the legitimate scope of the business of the partnership until the partnership stands dissolved.

 Conclusion

Thus, to comprehend the general rule of vicarious liability, one can conclude that vicarious liability deals with cases where one person is held liable for the acts of another. In tort law, this rule is an exception to the rule of a person is held liable only for his act.

The principle of quit facit per se alium facit per se means “he who does the act through another is deemed in law to do it himself”. Hence. In the case of vicarious liability, the employers are responsible and held liable for the acts done by their servant if those acts are committed in the course of employment.

Similarly, the vicarious liability in cases of partnership has been analysed in two different stages. First, whether the partnership exists or not? Second, the wrongful act done should be in that simple course of business while law partnership is not disposed of.

FAQ’S

Q.1. What Is the Concept of Vicarious Liability?

 The concept of vicarious liability we can say that generally, a person is liable for his wrongdoing and does not bear any obligation for the wrong done of any other person. However, the doctrine of vicarious liability is that the liability of one person may arise for the act or omission of another person. This concept of making another person liable for one’s actions is making the former vicariously liable for the act done. However, it is necessary that to make another person liable for other’s acts done, there must be some kind of relationship between the two and the wrongful act or omission that is done must be concerning the two and connected to them in a certain way.

Q.2. What Are the Basic Requirements to Become A Partner of a Firm?

To become a partner of any firm certain requirements which are necessary by which a person can enter a partnership according to the law-

•     A person

•     A firm recognized by law

•     A company

•     A trustee

•     Chief member of a family

Q.3. What Is the Liability of The Partners as Against the Third Party If the Injury Is Caused?

Each partner is jointly and severally liable. All the partners jointly or individually can be sued in case of breach of contract, trust, etc. If a third party is injured due to the act of one partner, then to impose liability on all the partners, the act must do i.e. the wrongful act or omission should be in the ordinary course of business or he should have the authority to do so.  

Q.4. What Are the Basic Sections That Deal with Vicarious Liability in The Partnership Act?

Under the Partnership Act, 1932, a wider and comprehensive concept of partners and their liabilities are explained. Section 4 of the Act deals with the definition of a partner, proceeding with section 6 which determines the existence of a partnership, and lastly, section 13 of the Act explains the rights and their liabilities thereof.

References

https://ir.law.fsu.edu/cgi/viewcontent.cgi?article=1212&context=articles

https://blog.ipleaders.in/vicarious-liability-in-case-of-partners-in-a-law-firm-in-tort-law/#:~:text=In%20a%20Partnership%20firm%20each,loss%20or%20injury%20of%20client

https://www.ucc.ie/academic/law/odg/attachments/NEYERS_(Theory_of_VL).pdf


[1] (1858) 3 Macqueen 300

[2] (1903) 1 KB 81

[3] (2015) AP 87

[4] 2001 (1) ALD Cri 894

[5] (1979) Cal. App 98

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