CPA Exam — REG (Regulation)Business LawMedium
A general contractor, Builder Inc., hires a subcontractor, Electric LLC, to handle all electrical work for a new commercial building project. The contract between Builder Inc. and Electric LLC contains a clause stating, 'Electric LLC is an independent contractor and not an employee of Builder Inc.' During the project, an Electric LLC employee negligently causes significant damage to the building's plumbing system. A third party sues Builder Inc. for the damages. Under the doctrine of *respondeat superior*, is Builder Inc. likely liable for the Electric LLC employee's negligence?
- AYes, because Builder Inc. is the general contractor and responsible for all work on site.
- BNo, because Electric LLC is an independent contractor, not an employee, negating *respondeat superior*.
- CNo, unless Builder Inc. was directly negligent in hiring Electric LLC.
- DYes, if Builder Inc. exercised significant control over the daily activities of the Electric LLC employee.
Show answer & explanationAnswer & explanation
Correct answer: B. No, because Electric LLC is an independent contractor, not an employee, negating *respondeat superior*.
The doctrine of *respondeat superior* holds an employer liable for the torts of their employees committed within the scope of employment. However, it generally does not apply to the torts of independent contractors or their employees, as the hiring party typically does not control the manner and means of the independent contractor's work.
Why the other options are wrong
- A. Being a general contractor does not automatically create *respondeat superior* liability for independent subcontractors' employees.
- C. Direct negligence (e.g., negligent hiring) is a separate basis for liability, distinct from *respondeat superior*.
- D. If Builder Inc. *did* exercise significant control, Electric LLC might be reclassified as an employee, but the question states they are an independent contractor.
Respondeat Superior
A legal doctrine holding an employer or principal liable for the wrongful acts of an employee or agent committed within the scope of their employment or agency.
- Latin for 'let the master answer'.
- Applies to employees, not typically independent contractors.
- The act must be within the 'scope of employment' or 'scope of agency'.
- A form of vicarious liability.
Memory trick: R-I-N: Respondeat, Independent, Non-Delegable.