The liability of one party for the action or inaction of another party, even though the party held liable is not directly responsible for any injury. For example, a company may be held liable for the actions of an employee, or a parent may be held liable for injury caused by a child.Case Study
In 1999 testimony before a U.S. Senate subcommittee, Enterprise Rent-A-Car Vice President Ray Wagner spoke in favor of legislation that would restrict litigation involving vicarious liability of motor vehicle rental companies. Wagner stated he felt it was unfair to subject car rental companies to unlimited liability for the acts of renters. Unlimited liability was a fact of life for rental companies in several states, including Connecticut, Iowa, Maine, New York, Rhode Island, and the District of Columbia. A problem the firms faced was that vehicles might be rented in one state but involved in an accident in another state with liberal liability laws. Several cases were cited during the testimony, including one in which Thrifty rented a car in Toronto to an individual who was involved in an accident while driving the car in New York. The police report indicated the driver of the rental car was driving too fast and following too close. A three-day jury trial resulted in Thrifty being held vicariously liable under New York law and required to pay $1.1 million in damages to the plaintiff. In another case, four British sailors rented a car from Alamo in Fort Lauderdale, Florida, to drive to Naples, Florida. While driving to Naples, the driver of the car fell asleep and allowed the car to leave the road and crash into a canal. The driver and two passengers were killed, and the fourth passenger was seriously injured. Alamo, as owner of the car, was held vicariously liable, even though no negligence was attributed to the firm. The jury ordered that Alamo pay the plaintiffs $7.7 million, an award that was affirmed on appeal.