What is Enterprise Liability?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 22 January 2020
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Enterprise liability is an area of the law allowing for joint liability in cases where industry practices known to be potentially unsafe are involved. This allows people to recover damages from entities involved in the practices in question, even if they don't directly engage in them. In a simple example, if a company spins off a subsidiary and maintains the assets with the parent company, a person can sue the subsidiary and parent company together to collect damages. This legal doctrine has its origins in the industrial revolution.

One important aspect of enterprise liability is the concept of no-fault liability. In most cases, to collect damages, people must be able to show legal causation and demonstrate that the party being sued is at fault. If fault can't be proved, the case will be ruled in favor of the defendant. With enterprise liability, people do not need to directly prove fault. Thus, workers suing for damages related to working in a dangerous industry can collect them even if they cannot categorically show that their injuries were caused by their work; a coal miner, for example, can sue after developing a respiratory condition, as such conditions are a known hazard of the mining industry.


Along with the no-fault liability comes the ability to sue related parties who are not directly involved, including both individuals and entities. Companies engaging in practices known to be potentially unsafe can be held liable for them even if they involve a separate department or subsidiary. This allows for the possibility of collecting very large damages even if companies attempt to isolate their more hazardous operations from their assets.

Enterprise liability covers both civil and criminal liability, allowing law enforcement to take actions against companies when their unsafe practices violate the law. Attorneys may use a variety of arguments in such cases, including documenting a history of such practices and generally known information about the industry, with the goal of demonstrating that a case meets the test of enterprise liability and the company is indeed liable.

Corporations engaging in hazardous activities use a number of means to protect themselves, including retaining very aggressive legal staffs and maintaining liability insurance to cover situations when they are brought to court. Steps are also taken to limit the risk of accidents and other issues, with the goal of preventing situations from arising in the first place, taking a proactive approach to staying out of court.


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Post 2

@ceilingcat - I agree with you about holding the subsidiary companies responsible. However, I think the idea of no-fault liability is ridiculous.

These lawsuits should be the same as any other personal injury lawsuit. You have to prove that you suffered an injury, and that it was directly related to your work or whatever. I don't think it would be fair to make a company pay if someone developed a condition for some other reason.

I know a lot of people feel like "oh, down with big business." But in the end that just hurts our economy!

Post 1

I think enterprise liability is a great idea. Companies shouldn't just be able to hide their assets in their subsidiary companies to get out of paying a settlement.

I also really like the idea of no fault liability. It seem likes our legal system puts so many burdens on victims. It's nice to here for once that if the industry does things that are known to be unsafe, and someone gets hurt, they can recover damages without going through a whole big ordeal.

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