Management and Organizational Studies 2275A/B Chapter 16: Chapter 16.docx
A corporation can experience two distinct kinds of liability in tort: primary liability and vicarious liability. A corporation has primary liability for a tort when, in law, it is regarded as the entity that actually committed the tort in question. Identification theory: a theory specifying that a corporation is liable when the person committing the wrong is the corporation"s directing mind. The theory seeks to determine which person or persons are the directing mind of the corporation. When that person (or persons) commits a tort related to the business enterprise, this conduct is identified with or attributed to the corporation itself. Generally, it is the highest placed corporate officers who are classified as directing minds, while low-level employees are not. May have more than one directing mind. A corporation has vicarious liability when the tort has been committed by an agent or employee who is not a directing mind of the corporation. Applies to both the company and the person.