Enterprise Liability
Encyclopedia
Enterprise liability is a legal doctrine
under which individual entities (for example, otherwise legally unrelated corporations or people) can be held jointly liable
for some action on the basis of being part of a shared enterprise. Enterprise liability is a form of secondary liability
.
For example, suppose high-risk manufacturing activities are shunted into one corporation, while a second "marketing" corporation keeps all the profits. In the case that someone was injured by the manufacturing activity, a court might apply the enterprise liability doctrine to allow recovery from the marketing corporation, which holds all the assets.
The doctrine emerged from litigation in the wake of the 1977 Beverly Hills Supper Club fire
. The doctrine is examined in Walkovsky v. Carlton, 223 N.E.2d 6 (N.Y.
1966).
Legal doctrine
A legal doctrine is a framework, set of rules, procedural steps, or test, often established through precedent in the common law, through which judgments can be determined in a given legal case. A doctrine comes about when a judge makes a ruling where a process is outlined and applied, and allows...
under which individual entities (for example, otherwise legally unrelated corporations or people) can be held jointly liable
Joint and several liability
Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be:* jointly liable, or* severally liable, or* jointly and severally liable.-Joint liability:...
for some action on the basis of being part of a shared enterprise. Enterprise liability is a form of secondary liability
Secondary liability
Secondary liability, or indirect infringement, arises when a party materially contributes to, facilitates, induces, or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary liability rules for trademarks and patents; however,...
.
For example, suppose high-risk manufacturing activities are shunted into one corporation, while a second "marketing" corporation keeps all the profits. In the case that someone was injured by the manufacturing activity, a court might apply the enterprise liability doctrine to allow recovery from the marketing corporation, which holds all the assets.
The doctrine emerged from litigation in the wake of the 1977 Beverly Hills Supper Club fire
Beverly Hills Supper Club fire
The Beverly Hills Supper Club fire in Southgate, Kentucky is the third deadliest nightclub fire in U.S. history. It occurred on the night of May 28, 1977, during the Memorial Day weekend...
. The doctrine is examined in Walkovsky v. Carlton, 223 N.E.2d 6 (N.Y.
New York Court of Appeals
The New York Court of Appeals is the highest court in the U.S. state of New York. The Court of Appeals consists of seven judges: the Chief Judge and six associate judges who are appointed by the Governor to 14-year terms...
1966).