Imputation (law)

To incur liability for a crime, a person must have both committed a prohibited act (the actus reus, which must be willed: see automatism) and have had an appropriate mental element (the mens rea) at the relevant time (see the technical requirement for concurrence). A key component of the mens rea is any knowledge that the alleged criminal might have had. For these purposes, knowledge can be both actual and constructive—i.e., the court can impute knowledge where appropriate.

There is no ambiguity when the alleged criminal actually intended to cause the particular harm. Things are more difficult when the defendant denies actual knowledge. When evaluating behavior, the legal process assumes the defendant was aware of their immediate physical surroundings and understood practical cause and effect. A mens rea is imputed when a person with reasonable foresight in the same circumstances would have foreseen that the actus reus would occur. This prevents a person from raising a defence based on willful blindness (note that in the United States, wilful blindness has a slightly different meaning).

A problem arises when the defendant is a corporation. By its nature, a fictitious person can only act through the human agency of the natural persons that it employs. Equally, it has no mind to constitute the mens rea. Hence, the notion of vicarious liability for companies and other business entities exclusively depends on the ability to impute knowledge.

The test is one of identification. If the natural person who acts can be "identified with the mind of the company" when performing the actions forming the actus reus, all the relevant mental elements will be imputed to the company. This test, sometimes termed the alter ego test, is objective and cannot be distracted by the job title or description formally held by the human agent. This prevents evasion of liability by the simple expedient of naming the real director of affairs as the janitor.

However, not all actions trigger this transference. When acting, the human agent identified as the mind must be promoting the company's interests in some practical way. If they are engaged in an entirely personal activity—e.g., attacking a fellow employee out of anger or stealing from the company—the courts do not impute the relevant mens rea to the company.

In the United States, the courts use a three-pronged test to determine whether a corporation is vicariously liable for the acts of its employees:

1. The employee must have acted within the scope of employment.
2. The employee must have acted, at least partly, to benefit the corporation.
3. It must be reasonable to impute the employee's acts and intentions to the corporation.

A standard example of imputation arises through the principle of joint endeavour. Where two or more people embark on a joint exercise, they are equally liable for everything that happens during the execution of their plan. For this purpose, joint principals are treated as knowing everything that happens, whether they were present or not. The requisite mens rea formed by one is imputed to the others to enable a conviction. For example, suppose that a gang conspire to rob a bank. One remains outside in the car to ensure a quick escape. If the others kill a guard inside the bank, the driver is jointly liable for the homicide.

In the majority of agency situations, agents must be allowed some degree of discretion in the conduct of routine transactions. Hence, there is no need to seek specific authorisation for every deal or detail within a deal. But, when the agent acts with actual or apparent authority, all the agent's knowledge will be imputed to the principal. If principals were allowed to hide behind their agents' ignorance, mistakes, or failures to communicate, they could achieve better results than if they acted personally. For example, if the particular deal turned out well, the principal could adopt the transaction—if it turned out badly, the principal could disavow it. If not for imputation, there would be a perverse incentive to conduct business through agents rather than personally. Consequently, the principal cannot exploit ignorance to advantage by instructing the agent to withhold key information, or by appointing an agent known to be secretive.

This rule in favour of imputation relates to the generality of the duties an agent owes to a principal, in particular the agent's duty to communicate material facts to the principal. Since the purpose of the law is to offer protection to Third Parties who act in good faith, it is reasonable to allow them to believe that, in most cases, the agents have fulfilled this duty. After all, the principal selects the agents and has the power to control their actions both through express instructions and incentives intended to influence their behaviour which will include laying down routines for how agents should handle information, and the extent to which agents will be rewarded for transmitting information of commercial value. The result is a form of strict liability in which the legal consequences of an agent's acts or omissions are attributed to a principal even when the principal was without fault in appointing or supervising the agent.