Overview of corporate organizations and business models

Business Law and Strict Liability

Strict Liability Distinguished from General Liability Principles:

Generally, to establish tort liability in connection with injuries and economic loses from industrial accidents or other work-related mishaps against a company, the plaintiff must establish four specific elements. The plaintiff must establish that the defendant company owed him a duty of care; that the duty of care was breached; that the plaintiff suffered an injury; and that the breach was the proximate cause of the plaintiff's injury.

Ordinarily, a finding of negligence is necessary to create liability for the breach of duty. For example, where a person slips and falls in a supermarket, there is no liability on the part of the supermarket just because the accident occurred on their premises. To establish that the supermarket breached its duty of care, the plaintiff would have to show that the store failed to clean up a liquid spill or failed to keep the shopping isle clear and that the failure caused the fall. If the person simply loses his or her balance and the store did nothing negligent to contribute to the accident, there is no basis for liability.

Certain commercial activities are inherently so dangerous that there is no legal requirement to establish that the defendant company actually breached any duty that caused or contributed to the harm suffered by the plaintiff. Under those situations, the plaintiff must only establish that the injury or economic loss suffered was caused by the defendant's dangerous commercial activities. The most common examples of strict liability where the inherently dangerous nature of the chosen business activities of the defendant company are enough to establish liability for any losses are explosive manufacturers and keepers of wild animals.

Gas Station Strict Liability:

Another example of a strict-liability commercial activity would be a gasoline station. A typical gas station facility must store thousands of gallons of highly inflammable liquid gasoline and diesel fuel oil in underground tanks. As in the case of explosive manufacturing and housing wild animals, running a commercial gas station is a commercial activity that is inherently dangerous no matter what precautions the operator takes to prevent accidents that could cause harm to others.

Running a gas station is an ultra-hazardous activity whose dangers can be mitigated as much as possible, but the very nature of the activity is impossible to make completely safe. Therefore, unlike the situation in the supermarket, any injuries suffered by victims of a fire or an explosion caused by the gas station's stored hazardous liquids would not require any showing of negligence on the part of the gas station owners or operators. (Of course, if the plaintiff was injured in a slip and fall in the cashier area and not because of the inherently dangerous aspect of gasoline storage, the same requirement would apply with respect to establishing a negligent breach of duty would apply even at the gas station.)

Public Policy Rationale: