Private Law Theory

ABSTRACT
In February 2023, the US Supreme Court unanimously held that a bankrupt debtor could not discharge a debt she incurred as a result of a fraud perpetrated by her husband and business partner, even though the debtor was personally innocent of the fraud and her liability was purely vicarious. The decision sheds light on why the law imposes vicarious liability; that is, why the law holds one person responsible for the misdeeds of another, just as if the wrongdoer and the defendant were the same person.

The preferred academic justification of vicarious liability, endorsed by Dean William Prosser’s treatise on torts, is the justice of shifting losses from hapless tort victims to deep pocket employers with the ability to spread the losses to the community at large by raising their prices. There are many decisions, including the recent ruling of the Supreme Court, that are inconsistent with this theory. This Article argues that a better explanation of the doctrine of vicarious liability lies in the concept of agency: the notion that the employment of agents by an employer or principal involves a voluntary extension of the principal’s legal personality, such that it is fair to treat the actions of agents, within the scope of their agency, as the actions of the agents’ principal. In other words, vicarious responsibility is the responsibility of a principal for the actions of the principal’s voluntarily expanded legal self. The shifting of losses to deep pocket employers is a frequent result of vicarious liability and sometimes a motive to construe vicarious responsibility expansively. It is not the doctrine’s true purpose, justification, or rationale.

Harris, Daniel, The US Supreme Court Illuminates the Basis of Vicarious Liability, 32 ABI Law Review 57 (2024).