Rules of an Employer

In this case, the small business owner will be liable to the vendor for the improper order due to vicarious liability for acts committed by his friends. The friend in this case, acted in the capacity of an employee of the small business. The friends can be considered as employees of the business through implied appointment. This is because the small business owner allowed them to act in capacity of employees and even dressing as employees. The owner had never indicated to the vendors that the friends were not employees to the business and they had even carried out business with the same employee.  

The business is not liable for all the actions of its employees. Where the employee commits an act outside of working hours, the employer cannot be held liable. Where the employer can prove that he undertook reasonable actions to prevent the employee from carrying out the alleged actions, the business cannot be held liable for such an act committed by an employee. Where the employee acts ultra vires, acting beyond legal capacity, the employer cannot be held liable of the action as an employee will have exceeded the powers granted to them by the employer.