Question

Principle: Master is liable for the acts of his servant done in the course of his duties.
Facts: X hired an employee Y in his construction business. Y was the property in-charge who received construction material and gave receipts for the material received by him. Z claimed payment for cement supplied to X which was duly received by Y. X denied the payment on the ground that he has only received half of the material and the balance was misutilized by the employee Y.

• A. X is liable for the entire amount
• B. X is liable for the part amount only i.e. for payment of the cost of half of the material
• C. X is not liable for the misconduct/embezzlement of his employee
• D. Z can claim the balance payment only from Y

Hint:

Employers are liable for the actions of their employees performed during the course of employment, including cases of misconduct or embezzlement.

Answer 1

The Correct Option is A

As per the principle, the master (employer) is responsible for the acts of his servant (employee) that are performed in the course of employment. In this case, Y, who was employed by X, received the materials on behalf of X and gave receipts for the same. Even though Y misused the materials, the responsibility still lies with X as the employer since Y was acting under the scope of his employment. X is therefore liable for the entire payment, as he authorized Y to receive the materials.
Thus, the correct answer is (A).
Option (B) is incorrect because even if Y misappropriated the materials, X is still responsible for the entire payment. Option (C) is incorrect because the employer is liable for the acts of the employee, including misconduct during the course of employment. Option (D) is incorrect because Z can claim the entire payment from X, as X is the employer and is responsible for his employee's actions.

Answer 2

The rule makes a master answerable for acts his servant does in the course of duty. Y was X's property in-charge, authorised to receive material and issue receipts, and Y received the full quantity of cement from Z but later misused part of it. Let's examine each option.

1. X is liable for the entire amount: Y received the cement, and issuing receipts for material received was exactly the job X had given him. Because Y acted within that authority when he took delivery of the full quantity, X, as the employer, is bound by what Y did in that role and owes the entire payment to Z, regardless of what later happened to the goods.
2. X is liable for the part amount only i.e. for payment of the cost of half of the material: This would make X's liability depend on how honestly Y later handled the goods after receiving them. But Z's claim is based on the full quantity Y accepted and receipted on X's behalf, not on what remained afterward, so limiting payment to half understates what X actually owes.
3. X is not liable for the misconduct/embezzlement of his employee: This confuses the act of receiving material, which was within Y's authority, with what Y did afterward. The rule fixes liability on the master for the servant's acts done in the course of duty, and receiving the cement was squarely within that duty, so X cannot escape liability by pointing to Y's later misconduct.
4. Z can claim the balance payment only from Y: Z dealt with X's business through Y, who was authorised to receive goods and issue receipts on X's behalf. Z is entitled to look to X, the principal, for payment, since Y was acting as X's authorised representative when he accepted the delivery.

Because Y received the entire consignment while acting within his authority as X's property in-charge, X bears responsibility for the full payment, and any loss from Y's later misuse is a matter between X and Y.

Therefore, the correct answer is X is liable for the entire amount.

Answer 3

When a business holds an employee out as the person authorised to receive goods and sign for them, third parties are entitled to rely on that appearance of authority, whether or not the employee later behaves honestly with what he received. Applying this idea of apparent authority to the facts, Y was X's property in-charge, so Z was entitled to treat Y's receipt as binding on X.

1. X is liable for the entire amount: Y held the position of property in-charge, which gave him the apparent authority to receive the full delivery and issue a receipt on X's behalf. Z relied on that authority in good faith, so X is bound by Y's receipt for the entire quantity delivered, whatever Y did with it afterward.
2. X is liable for the part amount only i.e. for payment of the cost of half of the material: Apparent authority does not shrink after the fact based on how the goods were later used, Y's authority to receive on X's behalf covered the whole delivery when it was accepted, so limiting payment to half ignores what Z was entitled to rely on at the time.
3. X is not liable for the misconduct/embezzlement of his employee: This confuses Y's authority to receive goods, which bound X the moment Z relied on it, with Y's later dishonest conduct, which is a separate matter. The apparent authority that bound X at the time of receipt is untouched by what Y did afterward.
4. Z can claim the balance payment only from Y: Z dealt with X's business through Y precisely because Y appeared authorised to receive goods for X. Z is entitled to hold X, the principal who created that appearance of authority, responsible, not to chase Y personally for a business transaction Z believed was with X.

Because Y's position gave him the apparent authority to receive the entire delivery on X's behalf, and Z relied on that authority, X is bound for the full payment regardless of what became of the goods afterward.

Therefore, the correct answer is X is liable for the entire amount.