CORPORATE LIABLITY FOR TORTS AND CRIMES

CORPORATE LIABLITY FOR TORTS AND CRIMES

·         Corporate Liability for Torts and Crimes

The corporate personality of the company creates an issue when comes in contact with the general law that is applied to natural persons. Such as the matters related to the mental state of a person to assess the imposition of liability. In such cases, the natural persons in the company are treated as the state of mind of company. At this point, the fictional entity theory of corporate personality fails and the company in law is regarded as the people in it.

Engineering v Graham

In this case, the court held that the natural persons in the company act as the body of the company. The directors and managers of the company represent the willingness and mind of the company. Thus the state of mind of this person is the mind of the company and is treated by the law as such.

·         Liability in Torts

A company is vicariously liable for its agents or members for the commission of any tort. Generally, the court does not accept the argument that a company could not be liable for an untra vires tort. The person who committed the tort is most of the time made also liable to the company. In case the managing directors or the Shareholder are involved in a tortuous act against a third party the court uses many tests to determine whether the person is to be made liable individually.

Standard Chartered Bank v Pakistan National Shipping Corporation

The managing director made a fraudulent misrepresentation. All the elements of tort were proved against him. The court held that when someone committed fraud, he should be made liable for his actions. Whether the company is liable also or not depends upon the circumstances.

·         Criminal Liability

Before 1944 companies were not liable for crimes. However, vicarious liability was used to make companies liable for certain crimes. For the companies, strict liability was applied as it didn’t require mens rea. Companies now have direct criminal liability imposed upon them. The technique of identifying is used to figure out the senior individual whose state of mind can be regarded as that of the company’s to establish mens rea.

 

R Vp & O European Ferries

In this case, the act of company manslaughter was identified. It was held that it is necessary to identify one individual with the necessary degree of mens rea for manslaughter.

Later on, the Commission made a recommendation of the new offense of corporate killing where the conduct of the company fails below what could reasonably be excepted. In such situations, death is regarded as been caused by companies' conduct. Thus Acts such as the Corporate Manslaughter and Corporate Homicide Act 2007 are introduced. For the commission of the offense the Acts, make the company liable with a heavy fine. 

Also, NAB Ordinance makes a company liable for defaults of loans. Money laundering also appears as criminal liability for the corporation.