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What Qualifies as Corporate Negligence?


April 03, 2012


Corporate negligence can often be difficult to establish. For a corporation to be declared negligent, it must be proven that a corporation or one of its employees did undue harm to a third party by breaching their responsibility.

Often the shareholders of a corporation will bring suit against a member of the board of directors who does not observe his or her duty of care. In such a situation the corporation itself is held in vicarious liability for the acts of the singular entity who committed corporate negligence. The board of directors of a company has a duty of care to its shareholders to not devalue a company through acts of negligence. Actions, such as not having an attorney review contracts or not seeking expert advice in situations that directly affect company shares, can be considered negligent. That’s why it is very important for corporations to seek expert legal advice in any situation that could result in corporate negligence.


In addition to shareholders being harmed, acts of corporate negligence can affect consumers. If consumers are harmed by the acts of a corporation, then they may bring suit. For example, a pharmaceutical company’s duty of care entails that they only place medicine on the market that is safe for human consumption. However, it is often established after hitting the shelf that certain pharmaceuticals are unsafe and can result in the injury or the death of consumers.

If liability can be traced to a singular entity, a corporation will still be held for vicarious liability. This is because a corporation is responsible for the actions of those individuals whom it employs. However, a corporation might then be able to bring suit against the negligent individual to attempt to recoup some of the damages following a corporate negligence suit.

Suits of corporate negligence are often brought against hospitals. Hospitals can be considered if they don’t provide their duty of care which includes:

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