Vicarious Liability

DEFINITION of 'Vicarious Liability'

A situation in which one party is held partly responsible for the unlawful actions of a third party. The third party also carries his or her own share of the liability. Vicarious liability can arise in situations where one party is supposed to be responsible for (and have control over) a third party, and is negligent in carrying out that responsibility and exercising that control.

BREAKING DOWN 'Vicarious Liability'

For example, an employer can be held liable for the unlawful actions of an employee, such as harassment or discrimination in the workplace. Even though the employer is not the one who committed the unlawful act, the employer is held liable because it is considered responsible for its employees' actions while they are on the job and it is considered to be able to prevent and/or limit any harmful acts performed by its employees. The employer may be able to avoid vicarious liability by exercising reasonable care to prevent the unlawful behavior.





Another common source of vicarious liability occurs when a child behaves negligently. The parent can sometimes be held vicariously liable for the child's actions. One situation where this might occur is if a child injures or kills someone while driving.

RELATED TERMS
  1. Social Host Liability

    A legal term and area of law that deals with the liability of ...
  2. Secondary Liability

    A type of legal obligation where one party assumes legal responsibility ...
  3. Liability Management

    Use and management of liabilities, such as customer deposits, ...
  4. Liability Insurance

    Any type of insurance policy that protects an individual or business ...
  5. Liability

    A company's legal debts or obligations that arise during the ...
  6. Attrition

    The reduction in staff and employees in a company through normal ...
Related Articles
  1. Home & Auto

    Cover Your Company With Liability Insurance

    Every business is susceptible to legal action. Find out how to protect yours.
  2. Home & Auto

    Filling The Gaps In General Liability Insurance

    Standard liability coverage may not be enough. Special needs call for specialized policies.
  3. Executive Compensation

    How Restricted Stocks and RSUs Are Taxed

    Many firms pay a portion of their employees’ compensation in the form of restricted stock or restricted stock units.
  4. Economics

    What Does Triage Mean?

    The term triage refers to the practice of prioritizing work or customers into different levels so that the most urgent issues are handled first.
  5. Economics

    What Does the Back Office Do?

    A financial services company’s back office provides administrative and personnel support.
  6. Economics

    How Leadership Impacts Investments

    Investors often overlook a company’s leadership when evaluating an opportunity, but it’s an important quality to consider.
  7. Professionals

    The Path To Becoming A CEO

    Think you have what it takes to be chief executive? Find out what those at the top have in common.
  8. Entrepreneurship

    How to be Entrepreneurial at a Large Company

    In order to act as an intrapreneur, you must focus on processes, leverage a network and have the courage to strategically shake things up at the office.
  9. Stock Analysis

    How Yahoo (YHOO) Makes Money (For Now)

    Most of Yahoo’s current business model might sound redundant, but it remains the 5th most popular web site in the world. Here's how it generates revenue.
  10. Economics

    Explaining Quality Control

    Businesses use quality control to ensure their products and services meet a certain standard, as well as any industry regulations.
RELATED FAQS
  1. Why is social responsibility important to a business?

    Social responsibility is important to a business because it demonstrates to both consumers and the media that the company ... Read Full Answer >>
  2. How do you conduct effective social responsibility training?

    One way to provide employees with effective social responsibility training is to base training sessions on resources offered ... Read Full Answer >>
  3. How important are business ethics in running a profitable business?

    A number of factors play a part in making a business profitable, including expert management teams, dedicated and productive ... Read Full Answer >>
  4. What advice does Howard Schultz offer would-be business moguls?

    Starbucks CEO, billionaire and former sports tycoon Howard Schultz has several pieces of advice for would-be moguls and, ... Read Full Answer >>
  5. How does brand image and marketing affect market share?

    A company's marketing efforts have a direct impact on sales and market share, but they are not the only factors that influence ... Read Full Answer >>
  6. What is Tim Cook's managerial style? (AAPL)

    Tim Cook's managerial style could be broadly defined as democratic. Rather than standing in complete contrast to former Apple ... Read Full Answer >>
Hot Definitions
  1. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  2. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  3. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  4. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  5. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
Trading Center