Abraham Lukpata

GROUP ASSIGNMENT ON WITH AID OF ILLUSTRATIONS AND CASE LAW EVALUATE CIRCUMSTANCES UNDER WHICH A PRINCIPAL CAN BE VICARIOUSLY LIABLE FOR THE LIABILITIES OF AN AGENT COURSE TILE: BUSINESS LAW (BUS3102) BY 21/BAM/082 21/BAM/086 22/BAM/097 22/BAM/100 22/BAM/121 22/BAM/138 22/BAM/147 22/BAM/153 22/BAM/176 22/BAM/184 SUBMITTED TO DR. ANEOZENG EGBE (The course coordinator) THE DEPARTMENT OF BUSINESS ADMINISTRATION FACULTY OF MANAGEMENT SCIENCES UNIVERSITY OF CROSS RIVER STATE OGOJA CAMPUS IN PARTIAL FULFILMENT OF THE COURSE REQUIREMENTS DECEMBER, 2024. Table of Contents INTRODUCTION2 1. Acts within the Scope of the Agent’s Authority3 Case Law: Lloyd v. Grace, Smith & Co. (1912)3 Illustration:3 2. Acts Performed in the Course of Employment3 Case Law: Limpus v. London General Omnibus Co. (1862)4 Illustration:4 3. Acts That Benefit the Principal4 Case Law: Dubai Aluminium Co Ltd v. Salaam (2002)4 Illustration:4 4. Negligent Supervision or Selection of Agents4 Case Law: Yaba v. Lagos City Council (1971)5 Illustration:5 5. Ratification of Unauthorized Acts5 Case Law: Bolton Partners v. Lambert (1889)5 Illustration:5 6. Acts of Independent Contractors5 Case Law: Honeywill & Stein Ltd v. Larkin Bros Ltd (1934)6 Illustration:6 Conclusion6 INTRODUCTION Vicarious liability is a legal principle wherein a principal can be held accountable for the wrongful acts of their agent, provided those acts occur within the scope of the agent’s duties. This doctrine ensures that a party benefiting from an agent’s activities also bears the risk of any harm caused by that agent's conduct. The rationale is grounded in fairness and policy, promoting responsible delegation and supervision. To thoroughly evaluate this, we will discuss key circumstances under which a principal can be vicariously liable, supported by case law and practical illustrations. 1. Acts within the Scope of the Agent’s Authority A principal is liable when an agent commits a wrongful act within their express, implied, or apparent authority. Authority refers to the power granted by the principal to the agent to act on their behalf. Case Law: Lloyd v. Grace, Smith & Co. (1912) In this case, a widow approached a solicitor’s firm to sell her property. A clerk in the firm fraudulently transferred the property to himself and embezzled the proceeds. The firm was held liable because the clerk acted within the apparent authority granted by his employment, even though his actions were fraudulent. Illustration: If a bank teller (agent) accepts deposits but fraudulently embezzles the money, the bank (principal) can be held liable because the teller was performing duties within the scope of their authority. 2. Acts Performed in the Course of Employment For a principal to be vicariously liable, the agent’s wrongful act must occur while the agent is performing their official duties, even if they perform those duties in an improper manner. The connection between the wrongful act and the agent’s employment is essential. Case Law: Limpus v. London General Omnibus Co. (1862) In this case, a bus driver, despite being instructed not to race other buses, caused an accident while doing so. The company was held liable because the driver was performing his duties (driving a bus) within the course of his employment, albeit in a prohibited manner. Illustration: If a delivery driver for a courier company gets into an accident while delivering packages, the company can be held liable because the driver was carrying out their work duties when the accident occurred. 3. Acts That Benefit the Principal If the agent's actions, even if wrongful, benefit the principal, courts are more inclined to hold the principal vicariously liable. This reflects the principle that those who benefit from an agent’s actions should also bear the risk of misconduct. Case Law: Dubai Aluminium Co Ltd v. Salaam (2002) A partner in a law firm was involved in a fraudulent scheme that generated fees for the firm. The firm was held vicariously liable because the wrongful conduct benefited the firm financially. Illustration: If a sales representative lies about a product to close a deal, and the company profits from the sale, the company may be held liable for the agent’s misrepresentation. 4. Negligent Supervision or Selection of Agents A principal can be held liable if they negligently hire, train, or supervise an agent who subsequently causes harm. Even if the agent acts outside their authority, the principal’s negligence in managing the agent may lead to liability. Case Law: Yaba v. Lagos City Council (1971) A council employee caused harm due to inadequate training and supervision. The council was found liable because they failed in their duty to supervise their employee properly. Illustration: If a restaurant hires a chef without verifying their qualifications and the chef’s negligence leads to a food poisoning incident, the restaurant can be held liable for negligent hiring. 5. Ratification of Unauthorized Acts If a principal ratifies (approves) an agent's unauthorized act, they can be held liable for it. Ratification implies that the principal accepts the benefits or outcomes of the agent’s act, even if it was initially outside the agent’s authority. Case Law: Bolton Partners v. Lambert (1889) In this case, a company ratified a contract entered into without authority. The ratification made the company liable for the contract because it validated the agent’s actions retrospectively. Illustration: If an agent signs a contract without prior approval but the principal later accepts the terms and benefits, the principal is liable for fulfilling the obligations of that contract. 6. Acts of Independent Contractors Generally, a principal is not liable for the wrongful acts of an independent contractor. However, exceptions arise when the work is inherently dangerous or when the principal exercises substantial control over the contractor’s work. Case Law: Honeywill & Stein Ltd v. Larkin Bros Ltd (1934) A company hired a photographer for work involving hazardous chemicals. When an accident occurred, the company was held liable because the work was inherently dangerous. Illustration: If a construction company hires a contractor to demolish a building without proper safety measures, the company may be held liable if someone is injured during the demolition process. Conclusion A principal can be held vicariously liable for the liabilities of an agent under various circumstances, particularly when the agent’s wrongful acts occur within their authority, during employment, or to the benefit of the principal. Additional factors include negligent supervision, ratification of unauthorized acts, and control over inherently dangerous work. By understanding these principles, principals can mitigate risks through careful selection, training, and supervision of agents. Case law such as Lloyd v. Grace, Smith & Co., Limpus v. London General Omnibus Co., and Dubai Aluminium Co Ltd v. Salaam provide valuable precedents that underscore the importance of these circumstances.