Free Agents: Should Crowdsourcing Lead to Agency Liability for Firms?

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Erin R. Frankrone · 15 Vand. J. Ent. & Tech. L. 883

Abstract

Crowdsourcing has emerged as a new production paradigm through which firms outsource traditional employee tasks to an undefined and generally large network of people, the “crowd,” in the form of an open call. The relationships between the crowd and the firm vary across different crowdsourcing models and do not represent, either in fact or in theory, the employment or contractor relationships with which the law is familiar. Therefore, the law and the courts are ill-equipped to answer the questions of whether and how liability should attach to firms for the crowd’s harmful conduct toward third parties.

Agency law is the best lens through which to consider potential firm liability for the crowd’s misconduct. Although various characteristics of crowdsourcing make this an imperfect fit, agency theories of liability offer a workable foundation for determining whether and how liability should exist in a crowdsourcing context. A crowdsourcing liability regime should encourage the twin goals of promoting innovation and responsible business practices, and courts can best achieve these goals by adapting the apparent-authority and estoppel theories of agency liability to fit different crowdsourcing models.