Question:medium

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.
This question consists of legal principle(s) (hereinafter referred to as ‘principle‘) and facts. Such proposition may or may not be true in the real and legal sense, yet you have to conclusively assume them to be true for the purposes of this section. Principles have to be applied to the given facts to arrive at the most reasonable conclusion. Only one of the alternatives, i.e., (A), (B), (C), or (D) is the most reasonable conclusion. In other words, in answering the following questions, you must not rely on any principle except the principles that are given herein below for every question. Further you must not assume any facts other than those stated in the question. The objective of this section is to test your ability in legal aptitude, study of law, research aptitude and problem solving ability even if the ’most reasonable conclusion‘ arrived at may be absurd or unacceptable for any other reason.

Updated On: Jul 15, 2026
  • X is liable for the entire amount
  • X is liable for the part amount only i.e. for payment of the cost of half of the material
  • X is not liable for the misconduct/embezzlement of his employee
  • Z can claim the balance payment only from Y
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The Correct Option is A

Approach Solution - 1

Applying the principle directly: a master answers to outsiders for whatever his servant does within the scope of the job the servant was hired to do. Y's job was exactly to receive material and issue receipts on X's behalf, so the receipt Y gave to Z for the cement is treated as X's own act, regardless of what Y later did with the goods.

  1. X is liable for the entire amount: since receiving the material and confirming it by receipt fell squarely within Y's authorised role, the transaction binds X in full, this is the conclusion the principle points to.
  2. X is liable for the part amount only: splitting the liability would require Z to have known about or agreed to a partial acceptance, but nothing in the facts suggests Z's claim was ever anything less than the full quantity supplied and receipted.
  3. X is not liable for the misconduct of his employee: this confuses the master's liability to the outside party (Z) with the master's right to recover from his own employee afterward, the principle makes X answerable to Z regardless of Y's later misconduct.
  4. Z can claim the balance only from Y: Z dealt with X's business through X's authorised representative, so Z's claim runs against X; Y's misappropriation is a matter between X and Y, not something Z has to chase separately.

The principle of vicarious liability therefore places the full obligation on X, making X is liable for the entire amount the most reasonable conclusion.

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Approach Solution -2

Another way to read the principle is through the reason it exists: it places the risk of a servant's dishonesty on whichever party chose to trust that servant with the job, not on an outside party who dealt with the servant in good faith. X chose to appoint Y as property in-charge and gave him the authority to receive material and issue receipts, so X, not Z, is the one who put Y in a position to misuse the goods.

  1. X is liable for the entire amount: since X is the one who selected and trusted Y with the property in-charge role, X is the party who must bear the consequences of Y's later dishonesty, not Z, who simply supplied what was asked for and received a receipt in return.
  2. X is liable for the part amount only: shifting part of the risk onto Z would mean punishing the outside party who did nothing wrong, while Y's misappropriation, and the failure to supervise him, both sit entirely on X's side of the relationship.
  3. X is not liable for the misconduct of his employee: this would shift the entire risk of Y's dishonesty onto Z, the very outsider the principle is designed to protect, even though Z had no way of knowing or controlling what Y later did with the cement.
  4. Z can claim the balance only from Y: forcing Z to chase Y directly ignores that Z's transaction was with X's business, X is better placed than Z to recover from Y afterward, since X is the one who appointed and can discipline or sue his own employee.

Placing the risk on X, the party who appointed and trusted Y, rather than on Z, the outside supplier who relied on the receipt, is what the principle is meant to achieve.

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

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