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Simple English definitions for legal terms
entity liability
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A quick definition of entity liability:
Entity liability is a legal concept that means a corporation is responsible for any bad things its employees do while working for the company. Even if the employees break the rules or do something against the company's wishes, the corporation can still be held responsible if the employees were trying to help the company in some way. This rule was made a long time ago in a court case, and it means that corporations have to be careful about who they hire and how they train their employees.
A more thorough explanation:
In business law, entity liability refers to the legal concept that a corporation is treated as a separate legal entity and can be held responsible for any liabilities incurred by the business. This means that the corporation can be held liable for the actions of its agents, even if those actions are illegal or against corporate policy.
For example, if an employee of a corporation commits a crime while on the job, the corporation can be held liable for the employee's actions if the employee was acting within the scope of their employment and intended to benefit the corporation in some way. This is known as corporate criminal liability.
The concept of entity liability was established in the case of New York Central and Hudson River Railroad v. United States, where the court extended the tort doctrine of respondeat superior to criminal cases. This means that a corporation can be held responsible for the criminal actions of its agents, just as it can be held responsible for their negligent actions.