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5 - The enterprise

Published online by Cambridge University Press:  17 November 2010

Douglas Brodie
Affiliation:
University of Edinburgh
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Summary

It is obviously extremely important to determine what constitutes the enterprise for the purposes of enterprise liability. In particular the complexities of corporate structures pose challenging questions. A grouping of interconnected companies can allocate risk across the group in ways that have significant impact on third parties. The effect, in a tort case, can be hugely significant:

English company law possesses some curious features, which may generate curious results. A parent company may spawn a number of subsidiary companies, all controlled directly or indirectly by the shareholders of the parent company. If one of the subsidiary companies, to change the metaphor, turns out to be the runt of the litter and declines into insolvency to the dismay of its creditors, the parent company and the other subsidiary companies may prosper to the joy of the shareholders without any liability for the debts of the insolvent subsidiary.

The impact on tort litigation can be graphically illustrated in cases involving multiple claimants such as claims in respect of industrial diseases or environmental pollution. The number of plaintiffs may be great, as may the amounts claimed for. The potential liabilities of defendants in cases of this sort may be vast, though assessing the full extent of liability may also be problematic. The harm, for instance, in an industrial disease case may remain latent for a very long time. In cases of this sort a subsidiary may be forced into insolvency by the magnitude of the claims.

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Publisher: Cambridge University Press
Print publication year: 2010

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  • The enterprise
  • Douglas Brodie, University of Edinburgh
  • Book: Enterprise Liability and the Common Law
  • Online publication: 17 November 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511778711.006
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  • The enterprise
  • Douglas Brodie, University of Edinburgh
  • Book: Enterprise Liability and the Common Law
  • Online publication: 17 November 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511778711.006
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • The enterprise
  • Douglas Brodie, University of Edinburgh
  • Book: Enterprise Liability and the Common Law
  • Online publication: 17 November 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511778711.006
Available formats
×