What does vicarious liability mean?

Vicarious liability refers to a legal doctrine where one person is held liable for the negligent actions of another person. This typically occurs in scenarios where there is a significant relationship, such as between an employer and an employee. The principle is based on the idea that the party with greater control or authority (like an employer) should be responsible for the actions that take place during the course of employment or within the scope of their duties. Therefore, if the employee commits a wrongful act while performing their job, the employer can be held liable for those actions.

This concept is particularly important in tort law and provides a means for injured parties to seek compensation from a party that may have more financial resources than the individual who actually caused the harm. Understanding vicarious liability is crucial in personal finance and investments, as it influences the risk assessment of business operations and the potential financial responsibilities of individuals and organizations.