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.
Investopedia explains '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.