I have never lived around family while my boys were growing up, except for a neice and her daughter who lived with us while her daughter was a baby and my oldest was 2. Anyway, I have watched this behavior in other social settings, especially at church. If you witness this, and her parents are present, you need to take them over the incident and if there are marks on your child, you must be firm in telling them that this behavior is simply unacceptable, period. Let them see you pull both children together and explain to them in the simplest of terms how we love and share. Ask the little girl if she loves playing with your daughter and if she says yes (in front of her parents) praise her ("I am so glad because I know Sally loves playing with you), but tell her that using bad words is hurtful and your family does not speak that way because it does not display love. Explain by showing the child the marks she leaves that when people love, they do not hurt each other. Explain to her that she can come tell you if there is a problem between the two of them, but she would have to do it before she gets violent (and use that word). Then tell her that if she enjoys spending time with your daughter, she will have to control herself or you will remove your daughter from that time with her. My youngest son has the tendency to be aggressive, especially when I am there. When I leave, he does much better. But if either me or my husband are there, we will immediately remove him, get on his level, explain why his behavior was inappropriate and how to correct it, first by apologizing. He is 5 and gets this completely. We will watch him actually do what we are telling him is the right thing. If he refuses, we remove him instantly. Ask the little girl what is the right way to handle conflict and ask her to show you (again, in front of her parents if necessary). If she does the right them, gently praise her. Ask her, "IF you feel this way again, would you be willing to come tell me, so we can together fix the problem?" Let her be a part of the solution. Her parents may step in then when they see the value of you putting yourself into the solution, on the child's level. When I put my 5 year old in preschool this year, I was very honest with the teacher about this behavior and gave her full authority to correct it appropriately. That freed her to build into my son that he needed to respect all authority because it is for his safety and that of others. Like the other responses, you need to communicate to these parents that while you would like to respect their philosophy of parenting, when it comes to your child and her safety, your standards trump and if they cannot respect your authority to protect your child, you simply cannot encourage this relationship. Ask them if they think their child's behavior is a part of of normal growing up (it actually is, even if you consistently correct it, like I have to), but if these parents are more concerned about not wanting to discipline their child in public, then they will not respect your philosophy and you'll have to remove your daughter from that time and place. I have a friend right now with 5 children and she has been on both ends of this. It's hard to say no to family functions, but she will if certain people are there who don't care to correct their children.