Vicarious Liability for Design Professionals

Vicarious Liability Defined
Vicarious liability or “imputed liability” is the tort liability that a person or entity has for the acts or omissions of another. Vicarious liability of a principal can result from the acts of independent agents, partners, contractors, and employees. The most typical example of vicarious liability is in the employer-employee context. 

Vicarious liability is distinguishable from direct liability. Direct liability holds the person who committed the wrongful act liable for his or her conduct.  In contrast, vicarious liability holds a principal, who did not personally engage in any wrongful conduct, liable for the actions of another who engaged in the wrongful conduct.  Thus, even if the principal is completely innocent of any wrongdoing, he or she can be held responsible for the acts of another through the application of vicarious liability. 

Vicarious liability poses a risk for a design professional based on the possibility that a design professional can be found responsible for the breach of another’s duty of care. It can extend liability to design professionals in situations where it is determined that the design professional had control over another person, employee, agent, or contractor, even if the design professional did not commit a wrongful act.  For example, if an Owner hired a design professional, and in turn, the design professional hired a consultant, the design professional could be liable for tortious conduct committed by the consultant in performing or failing to perform the contractual duties if it is determined that the design professional has sufficient control over the worked performed by the consultant.

When Vicarious Liability Arises

  • AgencyVicarious liability can arise through agency, which is the relationship between a principal and an agent. A principal is a person who has authorized another person to act on his behalf and who is subject to his control.  By way of example, principals are employers, and agents are people authorized by a principal to act on the principal’s behalf, such as employees or, in some cases, contractors.  An agency relationship results when an agent agrees to act on the principal’s behalf and is subject to his control. In an employer-employee situation, the liability that arising from the agency relationship is often referred by the term “respondeat superior.” 

There are two different types of agency: actual and apparent.

    • Actual Agency– An agent has actual authority when he performs acts that he was authorized by the principal to perform. Actual authority can be granted expressly by the principal or can be implied based on the circumstances and the relationship between the parties. 
    • Apparent­ Agency– Apparent agency exists when a principal holds out an agent to the public in such a manner that a third party reasonably believes that the agent is authorized to act. Apparent agency can be created in various ways, including by word of mouth, advertising, or permitting the agent to say he is authorized to act. Therefore, a design professional may be held liable for another’s conduct, even if that person is not an agent, if the design professional has engaged in conduct that creates the impression that the individual is his or her agent
  • Statute Many jurisdictions have statutes that impose vicarious liability. Typically, these statutes will focus on the responsibilities and liabilities for specific types of employers or principals. The statutes may expand vicarious liability to create liability for a design professional for the conduct of non-agents based on public policy grounds.

How Vicarious Liability is Applied
In a case involving vicarious liability, preliminarily, there must be a finding of direct liability on the part of an agent, employee, contractor, etc.  If the agent is not found to be directly liable, there cannot be vicarious liability of the principal. If the agent is directly liable, the plaintiff may then also seek damages from the principal. 

Typically, courts will consider the relationship between the principal and the agent before determining vicarious liability. The most important factor in the court’s analysis will be whether or to what extent the principal had control over the agent’s acts and the results of those acts. The more control the principal had, the more likely a finding of vicarious liability.  

Takeaways

  • Design professionals should take great care in selecting consultants, agents, and employees, and should have well-drafted contracts and agreements that articulate the duties and scope of the sub-consultants, agents, and employees. 
  • Design professionals should be cautious in their outward representations to third parties to avoid creating apparent agency issues. 
  • Design professionals should be cognizant of the applicable law in the jurisdiction they are working in and whether there are applicable statutes that may expand liability.