Define: Derivative Liability

Derivative liability refers to the legal responsibility that arises when one party is held accountable for the actions or omissions of another party. It typically occurs when a person or entity has a legal relationship with the party that committed the wrongful act.

Common examples of derivative liability include employers being held responsible for the actions of their employees, parents being held responsible for the actions of their minor children, and companies being held responsible for the actions of their agents or representatives.

Derivative liability differs from direct liability in that it holds one party responsible for the actions of another party, rather than for their own actions. Direct liability arises when a person or entity is directly responsible for causing harm or committing a wrongful act.

Yes, under certain circumstances, an individual can be held derivatively liable for the actions of a corporation. This typically occurs when the individual is an officer, director, or shareholder who actively participated in or directed the wrongful conduct.

Derivative liability can be imposed in criminal cases, particularly in situations where one person aids, abets, or conspires with another person to commit a crime. In such cases, the person who assists or encourages the commission of the crime can be held derivatively liable for the criminal acts.

Yes, derivative liability can be imposed in civil cases. For example, if an employee causes harm to a third party while acting within the scope of their employment, the employer can be held derivatively liable for the employee’s actions.

Common defences against derivative liability claims include lack of knowledge or control over the actions of the party committing the wrongful act, lack of authority to direct or supervise the party, and lack of participation or involvement in the wrongful conduct.

Derivative liability cannot be transferred or assigned to another party. The party who is directly responsible for the wrongful act cannot escape liability by transferring it to someone else.

Derivative liability for the actions of an adult child is generally not imposed on parents. Once a child reaches the age of majority, they are typically considered legally responsible for their own actions.

Derivative liability can be imposed on a company for the actions of an independent contractor if the contractor is acting within the scope of their agency or if the company exercises control over the contractor’s actions. However, the specific circumstances and legal relationship between the parties will determine the extent of the company’s liability.