In modern time, corporations are held responsible for their action, and they are treated as a separate entity which can be sued. Vicarious liability refers to transferring the criminal responsibility for an offense committed by its agents to the corporation itself. A corporation is vicariously responsible or liable only when corporation officials commit a crime within the scope of employment or when acting on behalf of the company.
An investigation of the principles underlying criminal obligation of a human principal for the actions of his officials helps to determine the extent to which vicarious liability should be applied to corporations. There have been challenges for courts establishing the requirement of criminal intent and the applicability of vicarious liability. The difficulty occurs because the element of criminal intent is an essential factor in deciding whether to impose vicarious liability or not. Since vicarious liability is readily imposed for a crime not requiring criminal intent, it has been easy for courts to assume that the necessity for intent is itself the determining factor.
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It has also been suggested that corporate liability would induce shareholders to seek to enjoin criminal acts, but shareholders in most instances would be unlikely to know of a contemplated crime. Another argument advanced for the imposition of liability is that juries are not as reluctant to convict corporations as individuals. But the greater chance of conviction is an irrelevant consideration in determining the justification of vicarious liability. Most courts take the reasonable position that the corporation is criminally liable for acts of these officials in managing the business, whether it be said that their actions are the acts of the corporation, or, more accurately, that public policy demands the imposition of vicarious liability upon stockholders to this extent. An analogy may be drawn between corporate criminal liability and the law of punitive damages since the aim of both is to punish the offender and deter others.
The majority of jurisdictions hold a corporation for punitive damages only if the acts were authorized, ratified, or committed by officers. Applied to corporate accountability, the extension of vicarious responsibility to embrace the action of superior agents would provide flexibility, making possible a case-by-case development, and would avoid the extreme results reached by the application of corporate vicarious liability. A good example is a case of People v. Canadian Fur Trappers Corporation; the court argued that since shareholders do not actively manage the business activities, it follows that, in order to hold a company liable for authorized actions of its officials, authorization on the part of directors and officers must be a sufficient basis of liability (Boatright, Jul. 2008). The court noted that the acts were committed by the area manager, who was the sole representative of the corporation in his area responded to the Housing Administrator. The court correctly pointed out that corporations were liable for t he misconduct of its officials since they were working within the scope of their employment. When determining whether the action of corporation agents can be treated as vicarious liability, the decision should then be based upon public policy, with an objective weighing of competing for social objectives. The court has to determine whether the agents of the corporation were acting in the good interest of the company or not to declare a corporation to be vicariously liable.
Reference
Boatright, J. R. (Jul., 2008). Corporate Bodies and Guilty Minds: The Failure of Corporate Criminal Liability by William S. Laufer; . Business Ethics Quarterly; Vol. 18, No. 3 , , 417-426.
