The instrumental rule states that when one corporation has significant control over another corporation, the controlled corporation is considered a subsidiary of the controlling corporation. This implies that the controlling corporation possesses considerable authority over the controlled corporation and can make crucial decisions on its behalf. It can be likened to a scenario where an older sibling assists their younger sibling with their homework or takes charge of decision-making since the younger sibling is not capable enough to handle it independently.
The instrumentality rule states that a corporation can be considered a subsidiary if it is significantly controlled by another corporation. This means that the controlling corporation has a significant influence over the subsidiary’s operations and decision-making processes. For example, if Corporation A owns a majority of the shares in Corporation B and has the power to appoint the majority of the board of directors, then Corporation B can be considered a subsidiary of Corporation A under the instrumentality rule. Another example is when a parent company creates a separate subsidiary to carry out a specific business function, such as marketing or research and development. The subsidiary is controlled by the parent company and operates under its direction, making it subject to the instrumentality rule. This rule is important in determining the legal liability of corporations, as the parent company may be held responsible for the actions of its subsidiary under the principle of vicarious liability if the subsidiary engages in illegal activities.
The Instrumentality Rule is a legal doctrine that holds an employer liable for the actions of its employees if those actions were committed within the scope of their employment.
Under the Instrumentality Rule, if an employee causes harm to another person while performing their job duties, the employer can be held responsible for the employee’s actions.
No, the Instrumentality Rule typically does not apply to independent contractors as they are not considered employees of the company.
Courts consider various factors, such as whether the employee’s actions were authorized by the employer, whether the actions occurred during work hours, and whether the actions were for the benefit of the employer.
Yes, an employer can be held liable for an employee’s intentional misconduct if it occurred within the scope of their employment. However, there may be limitations depending on the specific circumstances of the case.
No, the Instrumentality Rule holds the employer responsible for the actions of its employees, regardless of whether the employee was acting negligently or intentionally.
Generally, the Instrumentality Rule applies to actions that occur within the scope of employment, which typically includes work hours. However, there may be exceptions if the employee’s actions were closely related to their job duties.
No, the Instrumentality Rule only applies if the employee’s actions were within the scope of their employment. If the employee was acting outside of their job duties, the employer may not be held liable.
If an employee acts in self-defence, the employer may not be held liable under the Instrumentality Rule, as the actions were not within the scope of their employment.
In some cases, an employer may still be held liable for an employee’s actions, even if they were in violation of company policies. The key factor is whether the actions were within the scope of employment, rather than whether they were in compliance with company policies.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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