Internalising Externalities – An Enterprise Risk Approach to Vicarious Liability in the 21st Century
(2015) 27 SAcLJ 822
This article argues that the law of vicarious liability must evolve to meet the exigencies of contemporary times. These include recognising the multiplicity of modern work arrangements beyond the traditional employment contract, as well as deterring sexual assault of young and vulnerable victims by those placed in positions of power, and ensuring that such victims receive just and adequate compensation for the ordeal they have suffered. It notes that over the last decade, courts have gravitated towards an overarching rationale of “enterprise risk” when imposing vicarious liability for intentional torts, and suggests that a more explicit acceptance of a new paradigm of “internalising externalities” can assist courts in deciding the appropriate legal responsibility to be assigned to entities – whether profit maximising companies, volunteer organisations or religious bodies – that benefit from carrying on an enterprise that necessarily introduces risks to others. It concludes that recent decisions of the Supreme Courts of the UK and Canada, as well as the Singapore Court of Appeal, on the law of vicarious liability are certainly on the right track, and a holistic consideration of requiring enterprises to internalise the risks that they create would better unify the different stages of the test for vicarious liability.