enterprise liability | Definition

Doc's CJ Glossary by Adam J. McKee
Course: Criminal Law

In the criminal law context, enterprise liability refers to the liability of an organization or corporate entity for the actions of its employees or agents. This concept holds that an organization can be held responsible for the criminal actions of its employees or agents if it can be shown that the actions were taken within the scope of the employee’s or agent’s job duties and that the organization had knowledge of, or failed to prevent, the actions.

Enterprise liability is a way to hold organizations accountable for the criminal actions of their employees or agents, even if the individuals themselves cannot be held responsible. This is because the organization is considered to have a greater ability to prevent criminal actions and compensate any victims.

For example, in a white-collar crime case, an enterprise might be held liable for its employees’ fraud or embezzlement if it is found that the organization had knowledge of, or failed to prevent, the illegal activities. Similarly, in a case involving environmental violations, an enterprise might be held liable for its employee’s actions if it is found that the organization had policies or procedures in place that allowed the violations to occur.

It’s important to note that for an enterprise to be held liable under this principle, it is not enough to show that an employee committed the criminal act. In addition, it must be shown that the act was committed within the scope of the employee’s duties and that the enterprise had knowledge of the act or had failed to prevent it. The enterprise should also have procedures in place to detect and prevent criminal acts by its employees or agents.

Enterprise liability can also be extended to situations where a third party may have committed a criminal act. Still, the enterprise is found to have not taken the appropriate measures to prevent it.


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Last Modified: 01/09/2023

 

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