Because of the growing frequency of educational malpractice lawsuits, this study reviewed the current status of case law regarding educational malpractice, and then compared these findings to the perceptions of Chicago area principals regarding educational malpractice liability due to misfeasance (mistaken actions) or nonfeasance (acts omitted). Also studied was the relation of these principals' perceptions of liability to five demographic variables: experience, size of district, involvement in litigation on behalf of the district, and level of school (elementary or secondary). Questionnaires with eight situations resembling actual court cases were mailed to 100 Chicago area principals, of whom 29 responded. The case law study revealed that principals could possibly be held liable for acts of misfeasance but are not likely to be held liable for acts of nonfeasance. Findings from the questionnaire indicate, however, that these principals perceive liability in situations of misfeasance regarding placement of students in special education classes, but no liability for an act of misfeasance in the regular classroom, even though case law indicates that principals can be liable for acts of misfeasance that are the proximate cause of a student's nonachievement in regular classrooms. No significant relationship was found between the demographic variables and perceptions of liability. (TE)