Analysis of the Reasons for Vicarious Liability in TortFrom the Perspective of Economics

Abstract: There is no word for "Vicarious Liability" in Chinese law, but as an important concept in the common law system and a common situation in civil law, this article explains the reason and rationality of the establishment of Vicarious Liability from the perspective of economics. This paper explains the benefits of applying the principle of strict liability by applying the Hand formula and the minimum cost principle. To be sure, Vicarious Liability greatly reduces the cost of private transactions, which is conducive to the circulation of the market and the development of the society. Research methods involved in the paper: literature analysis, and case analysis. The study finds that although Vicarious Liability is criticized by some branch theory in the law system, it still has the rationality and necessity of its existence. The importance of vicarious liability can be found especially in the field of employment relationships and in the minor infringement.