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What is vicarious liability

What is vicarious liability? How can it affect an employer? How can it affect a partner in a business?

Vicarious Liability is that a person, for example, an employer or a partner has to be liable for the acts, and the negligence of an employee or a partner, although the employer or the partner is not directly responsible for the negligence and damages. For example, when an employee of a petrol station causes a fire because he smokes while working, the employer will have to pay compensation for victims of the fire. Also, if my partner signs a stealthy contract to borrow money from the bank on behalf of our partnership business, I will be liable and have to pay for the debt.

Discuss Review questions 1-5 on pages 66-67 of your Course Materials Outline.

Review question 1

How is a partnership different from a company in a common law jurisdiction? How is a partnership different from a company in Vietnam? What type of business may be carried on by a partnership in Vietnam?

In a common law jurisdiction, a partnership is not a legal separate entity, and it is only a contract and does not need to register. Each partner is an agent for other partners when they are carrying on business together. All partners have to be liable 100% when the partnership business fails.

Meanwhile a company is a legal separate entity and need to be registered. And you can hide behind the company when there are debts, failures … You are not be held liable when the company fails.

In Vietnam jurisdiction, a partnership is not actual different from a company.

Because there are no clear differences between a partnership and a company in Vietnam, therefore type of business of a partnership is governed by Law on Enterprise.

Review question 2

What is a holding company? What purpose may it serve?

A holding company is opened to buy the shares of other companies. Its purpose is to control other companies by owning their shares.

Review question 3

What are the main difference between a joint stock (public) company and a limited liability (proprietary) company?

The main difference between a joint stock company and a limited liability company is that a joint stock company can sell shares to public, while a limited liability company cannot issue its shares to public.

Review question 4

What are the main difference between a representative office, a branch and a subsidiary company?

The main difference is that a representative office and a branch is a part of the parent company, while a subsidiary company is a separate entity from the parent company.

Review question 5

What are the advantages of carrying on a business overseas through a branch office? Compare the advantages of carrying on the business through a subsidiary company?

The advantage of a branch office is that parent company has complete control over the branch office; however, the parent company must be liable for the acts of branch office. In contrast, by opening a subsidiary company, parent company is protected from acts or negligence of its subsidiary company.


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