The Economic Efficiency of Vicarious Liability in Employment Relationships

Abstract

A tort that occurs because an employee is not qualified for a certain job but to operate that job and leads to damage. Many people may be confused in this case which party shall bear the tort liability caused by this infringement, the employer or the employee, and how vicarious liability has been applied. This paper introduces vicarious liability and vicarious liability in employment relationships. Under no matter civil law system or common law system, there is the same content of vicarious liability. This paper only focuses on the basis of vicarious liability which will not cause a fallacy between the common law system and the civil law system. Then the paper compares the economic efficiency under situations of the employer bears the liability of the unqualified employees tort and the counterpart, and illustrates the deficiencies of the current discussion. This paper combines law and economy to work out the optimal rule i.e. the most efficient rule under the background case. It draws the conclusion that strict vicarious liability is more efficient in the economy and supports the application of vicarious liability in the legal system.