Business Associations

Liability in Tort

An employer is liable for torts committed by employees acting in the scope of their employment. R3A § 2.04.


An employee is an agent whose principal controls or has the right to control the manner and means of his performance or work. R3A § 7.07(3)(a).


Numerous factual indicia are relevant to whether an agent is an employee. These include:

  • the extent of control that the agent and the principal have agreed the principal may exercise over details of the work;
  • whether the agent is engaged in a distinct occupation or business;
  • whether the type of work done by the agent is customarily done under a principal's direction or without supervision;
  • the skill required in the agent's occupation; whether the agent or the principal supplies the tools and other instrumentalities required for the work and the place in which to perform it;
  • the length of time during which the agent is engaged by a principal;
  • whether the agent is paid by the job or by the time worked; whether the agent's work is part of the principal's regular business;
  • whether the principal and the agent believe that they are creating an employment relationship;
  • and whether the principal is or is not in business.

Also relevant is the extent of control that the principal has exercised in practice over the details of the agent's work.

R3A § 7.07.

Scope of Employment

An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. An employee's act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer.

R3A § 7.07.


Conduct of a servant is within the scope of employment if:

  1. It is of a kind he is employed to perform;
  2. it occurs substantially within the authorized time and space limits; or
  3. it is actuated, at least in part, by a purpose to serve the master

Some of the factors used when considering whether an employee's acts are within the scope of employment are:

  1. the time, place and purpose of the act;
  2. its similarity to acts which the servant is authorized to perform;
  3. whether the act is commonly performed by servants;
  4. the extent of departure from normal methods; and
  5. whether the master would reasonably expect such act would be performed.

Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits, or too little actuated by a purpose to serve the master.

Principals and employees are each responsible for their own misconduct.

Direct Liability

A principal is directly liable when its agent acts tortiously with actual authority or if the principal ratifies the conduct. R3A § 7.03, R3A § 7.04.

A principal is directly liable when it is negligent in selecting, supervising, or otherwise controlling the agent. R3A § 7.03, R3A § 7.05.

A principal is directly liable when it delegates performance of a duty to use care to protect others or their property to an agent who fails to perform the duty. R3A § 7.03, R3A § 7.05.

Vicarious Liability

A principal is vicariously liable when its agent commits a tort while in the scope of his employment. R3A § 7.07.

Principals are vicariously liable for torts committed by their agents in communicating with third parties on or purportedly on behalf of the principal when actions taken by the agent with apparent authority constitute the tort or enable the agent to conceal its commission. R3A § 7.08.

  • This is basically only ever relevant in fraud cases.

All employees are agents, but not all independent contractors are.

Independent Contractor

An independent contractor is one who is hired to do a job, but who retains control over the job, as opposed to an employee.

Principals are generally not liable for the torts of their independent contractors, but can be if the job involves abnormally dangerous activities.