Question

Given below is a statement of legal principle followed by a factual situation. Apply the principle to the facts given below and select the most appropriate answer.

Principle: Vicarious liability is the liability of the Master or Principal for the tort committed by his servant or agent, provided the tort is committed in the course of employment. The Master or Principal is not liable for private wrongs of the servant/agent.

Facts: 'X' hands over some cash money at his house to 'Y', who is his (X's) neighbour and is also cashier in a bank, to be deposited in A's account in the bank. Instead of depositing the money, 'Y' misappropriates it.

Which of the following statements depicts the correct legal position in this given situation?

Options

• The bank would not be liable because 'Y' did not do any wrong in the course of his employment 

• The bank would be vicariously liable because 'Y' was the employee of the bank

• The bank would not be liable because 'Y' did not do any wrong

• The bank would be liable because 'Y' acted as bank's agent

Answer 1

The bank would not be liable because 'Y' did not do any wrong in the course of his employment 

Explanation:

According to the provisions of the law of torts on vicarious liability, a master or principal is liable for the torts committed by his servant or agent,  provided the tort is committed in the course of employment.  
In the present case, the bank is not liable for the act of Y, as he (Y) did no wrong in the course of employment of the bank. Secondly, Y is the neighbor of X, so there is no master-servant or principal-agent relationship between them.