Management and Organizational Studies 2275A/B Chapter Notes - Chapter 16: Canada Business Corporations Act, Derivative Suit, Legal Personality

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Chapter 16: the corporate form - operational matters. Corporation can experience two distinct liabilities in tort: Primary liability = when a corporation is regarded as the entity that actually committed he tort in question. Sometimes problematic because a corporation can work only through human agents. Identification theory = a theory specifying that a corporation is liable when the person committing the wrong is the corporation"s directing mind. Theory seeks the person who is directing the mind of the corporation. Liability of corporation is made direct not vicarious - because the conduct of directing mind is the conduct of the corporation. Normally the high level corporate officers to be the directing minds while the low level employees are not. Corporation has vicarious liability when tort has been committed by an agent or employee who is not a directing mind. Vicarious liability does not distinguish between natural employer and artificial employer (corporation) Courts generally don"t follow the identification theory approach.

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