The Personal Liability of Corporate Agents: Who Should Bear Pure Economic Losses?

CHRISTOPHER GOSNELL

ABSTRACT

Canadian law has reached the anomalous position that common employees are personally liable in negligence for pure economic loss they cause to clients of the corporation for which they work, whereas corporate agents within the directing mind of the corporation are not, unless they have personally adopted the act or words causing the loss. Rather than a conscious policy decision, this approach reflects the paralyzing effects of the recently discarded non-concurrency principle which attempted to keep contract and pure economic loss negligence in entirely distinct spheres. Without a non-currency principle, liability for pure economic loss could be imposed on a party who is joined to another through a contractual chain even though they are not privy to the same contracts. The courts have had great difficulty in reconciling this legal development with traditional privity of contract rules. In this respect, the courts' attempts to define the personal liability of corporate agents to corporate clients is but one discrete manifestation of the general doctrinal problem. The sooner courts reorient their focus to this broader question and begin to develop a general doctrinal language to address this problem, the sooner such outmoded categorizations can be addressed.

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Citation: (1997) 55(1) U.T. Fac. L. Rev. 77.
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