A note on negligence and collusion-proof liability

Principals are often held at least partially liable for the accidental harm caused by their agents. If the liability of the principal and agent is contingent on the court's establishment of the agent's negligence, the principal has an incentive to withhold evidence of the agent's negligence. Since the principal is often in the best position to monitor the agent and gather such evidence, this can lead the agent to take insufficient care in avoiding accidents. This paper will show that a collusion-proof liability scheme gives the principal no incentive to withhold evidence and induces the same level of preventive care as strict vicarious liability. Published by Elsevier Inc.