The purpose of vicarious liability and the arguments about it

Overview

Deep pockets justification for vicarious liability, enterprise risk justification and main criticism of vicarious liability.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is the deep pockets justification for vicarious liability?

   Model answer

   The deep pockets argument says liability should rest on the party able to meet the claim. An employer has the means and the insurance that an employee lacks.

2. 2

   How does loss spreading justify vicarious liability?

   Model answer

   An employer can insure against liability and pass the cost into the price of goods and services. The loss is thereby spread across many people rather than falling on one victim.

3. 3

   What is the enterprise risk justification?

   Model answer

   A business that creates a risk in pursuit of profit should bear the losses that risk produces. Vicarious liability puts accident costs where the benefit of the activity lies.

4. 4

   How does vicarious liability encourage safety?

   Model answer

   An employer facing liability has an incentive to select, train and supervise staff carefully. Insurers reinforce that incentive through premiums and safety conditions.

5. 5

   Give the control justification for vicarious liability.

   Model answer

   An employer chooses the employee and directs how the work is done. Responsibility follows the power to control the activity that caused the harm.

6. 6

   What is the main criticism of vicarious liability?

   Model answer

   Vicarious liability makes a blameless employer pay for another person's wrong. The rule sits awkwardly with the principle that liability in tort follows fault.

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