Victim or injurer, small car or SUV: Tort liability rules under role-type uncertainty

In this paper we modify the standard tort model by introducing role-type uncertainty. That is, we assume that neither party knows in advance whether she will be the victim or the injurer when an accident occurs. When the standards of care of the two parties are set at the socially optimal levels, only pure comparative negligence and the equal division rule guarantee efficiency, while the rules of simple negligence, contributory negligence, and comparative negligence with fixed division (other than a 50:50 split) may produce inefficient equilibria. Since pure comparative negligence splits liability between negligent parties according to each party's degree of fault, it makes the accident loss division independent of one's role-type. This produces its efficiency advantage.We extend the model to the choice of vehicle size, as a factor determining who will be the injurer and who the victim in motor vehicle collisions. In the extension we analyze various standard negligence-based liability rules, and tax rules, as instruments to mitigate inefficiency resulting from the vehicle size “arms race.” We also examine two strict liability rules, one of which incorporates a comparative negligence feature; this rule prevents inefficiency from both role-type uncertainty and from the “arms race.”     

Socially optimal liability rules for firms with natural monopoly in contestable markets

This article considers the problem of socially efficient liability rules for firms in contestable markets where natural monopoly prevails due to decreasing average cost. If the fixed cost that pushes the entry-limiting price above marginal cost is large relative to the level of external harm of firms, the negligence regime is socially superior to the strict liability regime. In the opposite case, the strict liability rule may be socially superior.     

Strict liability versus negligence when the injurer's activity involves positive externalities

In this paper, I assert that, if the potential injurer’s activity involves externalities unrelated to accidents, the strict liability rule minimizing only the social cost associated with accidents does not induce the social optimum. I also demonstrate that if the externalities are positive, the negligence rule can perform better than the strict liability rule by selecting the due care appropriately, whereas it cannot if the externalities are negative. This argument can be applied to the product liability law. JEL Classification K13     

An attempt to incorporate fairness into an economic model of tort law

This paper incorporates fairness into a simple economic model of tort law and discusses the difficulties of doing so. People are assumed to adhere to either the negligence or the strict norm and to incur a cost if liability is not imposed in accordance with their norm. The optimal standard of negligence is determined in a trade-off between fairness and efficiency. Conditions are derived under which preferences for fairness do not affect the optimal negligence standard. The modeling difficulties concern the ad hoc nature of the fairness norms. They are argued to be inherent to the subject.     

The development of care technology under liability law

It is well known that strict liability and negligence induce pareto optimal care in a most restrictive model of unilateral accidents. The paper at hand extends this traditional theorem from its static context to an intertemporal setting where tort law induces progress in care technology. This model provides a methodological framework for a general analysis of the dynamic incentives generated by alternative liability rules. One of the many possible extensions of the basic model is to allow for incomplete information. Particularly, we drop the assumption that the authority setting the due care standard under negligence is able to assess technical progress ex ante. It is shown that the dynamic incentives of the negligence rule are distorted compared to strict liability in this modified framework.     

Scope of liability: the vanishing distinction between negligence and strict liability

The duty-of-care requirement cannot be used anymore as the touchstone to differentiate negligence from strict liability because it can be found in many forms of the latter. Duty of care is smuggled into strict liability hidden under the scope of liability requirement (traditionally called “proximate causation”). As far as the scope of liability requirement is common to negligence and to many forms of strict liability, there is a fairly large common ground to both liability rules, and consequently the marginal Hand formula is applied to both rules. Indeed, under a negligence rule, the marginal Hand formula is applied twice: first to assess whether or not the defendant did breach his or her duty of care, and, second, to delimit whether or not the defendant’s behavior was a proximate cause of the harm suffered by the victim. However, under a strict liability rule, the Hand formula is applied only once when the proximate causation question is raised. Traditional law and economics analysis has almost always taken the normative question raised by the causation requirement as given, which is a potential major problem due to the importance of scope of liability or proximate causation in legal practice. Defining the scope of liability, that is to say, the boundaries of the pool of potential defendants, is the basic legal policy decision for each and every liability rule. In the normative model presented in this paper, the government first chooses efficient scope of liability, and given the scope of liability, the government then decides the liability rule and damages that guarantee efficient precaution. In the article, most known scope of liability rationales developed by both common law and civil law systems are discussed in order to show the substantial common ground between negligence and strict liability.     

Lender Liability for Environmental Harm: An Argument Against Negligence Based Rules

A firm strictly liable for any harm done will choose an inefficiently low care level if there is a possibility that it goes bankrupt. One possibility to improve care is extending liability to secured lenders, as applied under CERCLA and as currently being discussed in the EU. I compare strict liability, partial liability and vague negligence for lenders in a model with moral hazard and environmental auditing. While auditing is socially valuable only if it increases the firm's care level, the creditor also calculates the reduction in the information rent. Thus, for each possible care level, monitoring is always too high. This effect is aggravated by a vague negligence rule, where the probability that a lender is found liable decreases in the level of auditing. It is demonstrated that partial liability is superior, because the incentive for excessive monitoring is diminished.     

Rethinking blood shield statutes in view of the hepatitis C pandemic and other emerging threats to the blood supply

Researchers have identified at least twenty-five pathogens that can be transmitted through blood transfusions. Four percent of patients who receive the average amount of blood during a transfusion are at risk of being infected with a contaminated unit, and exposed to the danger of serious adverse reactions, including future debilitating conditions. Victims of transfusion-related diseases, however, generally have been unsuccessful when making claims against the purveyors of blood products because of blood shield statutes that were initially enacted in response to unknown pathogens that made the blood an "unavoidably unsafe" product. Today, blood purveyors are aware of the possibility of epidemics from unsafe blood and have continued to research and supervise the blood supply to create mechanisms that detect and inactivate various blood-borne pathogens. In response to the current and advancing methods of blood purification, this Article suggests that a hybrid strict liability/negligence standard be implemented to ensure advancements in safety of blood transfusions. A strict liability standard should attach for infections that can be detected and eliminated through current testing and inactivation methods. A negligence standard should govern infections for which no current test or inactivating method is available. Under this approach, blood purveyors would be compelled to take account of the risks of any manufacturing decisions that they make, and they would not enjoy the freedom from liability that the blood shield statutes now provide. The costs necessary to ensure compliance with this hybrid structure are small in comparison to the social and economic costs exacted by thousands of transfusion-related diseases.     

Remedies for Dishonest Assistance

The paper considers the nature of claims against dishonest assistants and the various money remedies those claims may evoke. Dishonest assistance is a form of civil secondary liability whereby the assistant is held jointly and severally liable along with the trustee whose misconduct he assisted. This is the sense in which dishonest assistants are said to be accountable as constructive trustees. In order to understand remedies available against dishonest assistants it is accordingly necessary to understand the corresponding remedies against defaulting trustees and what it means for them to be accountable. The paper examines the two different types of compensation that may be awarded against defaulting trustees—substitutive and reparative—and observes that the same two types of compensation may be given against dishonest assistants in appropriate cases. It also explores the circumstances in which trustees and dishonest assistants should be accountable for profits and whether they should ever be liable to pay exemplary damages. A strict application of the theory of civil secondary liability produces controversial results in connection with these latter remedies.     

Victim interdependence in the accident setting

This paper considers the case in which potential victims affect each other by taking care. Analyzing standard liability rules, we show that the rule of strict liability with a defense of contributory negligence is in the best position to induce the efficient outcome, i.e., this liability rule ensures efficiency if victims affect each other negatively, that is care by one victim increases the accident exposure of other victims. This rule also makes attainment likely if victims affect each other positively, that is if care by one victim decreases the accident exposure of other victims. In contrast, other standard liability rules fail to induce first-best care.     

A note on judgment proofness and risk aversion

Shavell (Int Rev Law Econ 6:45–58, 1986) established that potentially judgment-proof injurers will take less care than injurers with sufficient funds in the case of strict liability. This note considers strict liability and shows that the reverse may hold if individuals are risk averse, i.e., some potentially judgment-proof injurers expend more on care than some injurers with assets greater than the harm. I am indebted to Florian Baumann, Laszlo Goerke, and an anonymous referee for very helpful suggestions.     

过失相抵与无过错责任简

过失相抵是损害赔偿法中的一项基本规则,适用于所有的损害赔偿之债。在适用无过错责任的侵权行为中,除非法律另有规定,可以适用过失相抵,这是法律之公平精神与自己责任原则的要求。在可以适用过失相抵规则的无过错责任中,对该规则的适用也应有一定的限制。首先,只有当受害人对损害的发生或扩大有重大过失时,才能适用过失相抵,减轻侵权人的赔偿责任。其次,如果受害人是不完全民事行为能力人,无论是受害人本人还是其监护人对于损害的发生或扩大有过错,对侵权人赔偿责任的减轻都不得低于全部损失的一定比例。     

Tacit collusion and liability rules

This paper demonstrates that the likelihood of tacit collusion in a given oligopolistic industry may depend on the kind of liability rule applied to the industry. We study typical settings for the analysis of product liability and environmental liability. For the latter, it is established that tacit collusion is more likely under strict liability than under negligence. However, the two liability rules are equivalent with regard to their effects on tacit collusion in the model pertaining to product liability. This context-dependent impact on tacit collusion can be traced back to a difference in the shape of firms’ cost functions.     

Products liability issues in school asbestos litigation

The hazards posed by deteriorating friable asbestos in the nation's schools are causing serious concerns for public health officials, school boards, parents and school employees. Reports by both the Environmental Protection Agency and the U.S. Attorney General's Office agree that both school children and school employees stand a substantially increased risk of contracting some form of asbestos-related disease as a result of exposure to deteriorating asbestos materials in school buildings. School systems plagued by the asbestos hazards are now filing suits against asbestos manufacturers alleging causes of action in breach of warranty, negligence and strict products liability in tort. Some plaintiffs in school asbestos litigation seek to recover the costs of EPA-mandated asbestos inspection and abatement programs which have already been completed. Still others request injunctions to compel the manufacturers themselves to conduct inspections and finance abatement. This Note examines the school asbestos situation from a legal perspective and focuses primarily on whether the schools' claims should be considered as economic losses or as property damage. It examines the impact of statutes of limitations on these cases under both contract and tort theories. The Note argues that school asbestos claims should be decided under a strict products liability standard.     

Can Strict Criminal Liability for Responsible Corporate Officers be Justified by the Duty to Use Extraordinary Care?

The responsible corporate officer (RCO) doctrine is, as a formal matter, an instance of strict criminal liability: the government need not prove the defendant’s mens rea in order to obtain a conviction, and the defendant may not escape conviction by proving lack of mens rea. Formal strict liability is sometimes consistent with retributive principles, especially when the strict liability pertains to the grading of an offense. But is strict liability consistent with retributive principles when it pertains, not to grading, but to whether the defendant has crossed the threshold from noncriminal to criminal conduct? In this essay, I review the two most plausible arguments supporting an affirmative answer in the context of the RCO doctrine. First, perhaps this doctrine reflects a rule-like form of negligence, akin to a rule that prohibits selling alcohol to a minor. Second, perhaps this doctrine expresses a duty to use extraordinary care to prevent a harm. Neither argument is persuasive. The first argument, although valid in some circumstances, fails to explain and justify the RCO doctrine. The second argument, a duty to use extraordinary care, is also inadequate. If “extraordinary care” simply means a flexibly applied negligence standard that considers the burdens and benefits of taking a precaution, it is problematic in premising criminal liability on ordinary negligence. If instead it refers to a higher duty or standard of care, it has many possible forms, such as requiring only a very slight deviation from a permissible or justifiable standard of conduct, placing a “thumb” on the scale of the Learned Hand test, identifying an epistemic standard more demanding than a reasonable person test, or recognizing a standard that is insensitive to individual capacities. However, some of these variations present a gratuitous or incoherent understanding of “negligence,” and none of them sufficiently explain and justify the RCO doctrine.     

An Economic Analysis of a Swedish Environmental Liability Case

A High Court case illustrates Swedish legal reasoning. The case extends the use of strict liability, although the main liability rule is negligence. The aim of the paper is to show the usefulness of the economic analysis in a practical case. The case concerns liability for damages caused by a leaky, hot-water pipe. The defendant maintained that it should not be held liable because it had not acted negligently, and the district court and the court of appeals supported the defence. Nevertheless, the High Court decided on strict liability. The High Court used a line of argumentation that, partly and implicitly, may have been economically correct. However, the precedence was most limited and unclear. Given an explicit goal of economic efficiency, the precedence would, in this simple and straightforward case, be that strict liability should prevail where the cause is unilateral and the injurer is able to cover and/or insure the loss.     

Strict Liability for Police Nonfeasance? The Kinghan Report on the Riot (Damages) Act 1886

The Riot (Damages) Act 1886 imposes a no‐fault obligation on police forces to compensate owners of property damaged in rioting. Following the riots across England in 2011 an independent Home Office review, the Kinghan Report, concluded that the fundamental principle of the Act should be retained, while the machinery should be modernised. The Report conceives of the Act as a useful, if highly unusual, compensation scheme that may ease socio‐economic problems in riot‐prone areas. This article questions that position. Strict liability offers potential advantages in contentious claims against public authorities, providing an incentive for the police to perform their duty to keep the peace while averting the questioning of police decision‐making that claims in negligence would inevitably require. The best alternative to negligence liability might not be ‘no liability’ (the general position now at common law), or liability based on ‘serious fault’ (as the Law Commission proposed in 2008), but liability without fault.     

过失责任与严格责任的整合解释——一个信息费用的视角

过失本质上是一个具有经济学内涵的定义。过失责任与严格责任均致力于实现事故预防费用、事故损失与制度运作的行政成本之和的最小化。信息费用决定着它们达成目标的能力和运作成本。过失标准客观化的原因在于节省信息费用。过失责任受制于确定过失的信息费用,严格责任受制于评估预测事故损失的信息费用。经济学的逻辑而非道德理论为这两种归责制度及其变迁提供了一个融贯简约而又富有说服力的解释。     

Proving liability for highly and fully automated vehicle accidents in Australia

This article considers how liability questions will be resolved under current Australian laws for automated vehicle (‘AV’) accidents. In terms of the parties that are likely to be held responsible, I argue that whether the human driver remains liable depends on the degree to which the relevant AV is automated, and the degree of control the human driver had over the events leading up to the particular accident. Assuming therefore that human drivers would not be held liable for the majority of highly and fully automated vehicle accidents, plaintiffs will have to establish liability on part of those who manufacture, maintain or contribute to the operation of AVs, under the claims available in Australia's product liability regime.This article then turns to the problems of proof that plaintiffs are likely to face in establishing AV manufacturer liability in negligence, or in a defective goods claim under Part 3–5 of the Australian Consumer Law (‘ACL’). Firstly, it may be difficult to determine the cause of the AV accident, due to the technical complexity of AVs and due to ongoing concerns as to the explainability of AI-decision making. Secondly, plaintiffs may struggle to prove fault in a negligence claim, or that the vehicle was defective for the purposes of Part 3–5 of the ACL. Essentially, under both actions, manufacturers will be held to a duty to undertake reasonable testing of their AVs. Given that it is currently impracticable to completely test for, and eliminate all AV errors, and due to the broader social utility the technology is likely to offer, plaintiffs may face evidentiary challenges in proving that the manufacturer's testing was unreasonable.     

On judgment proofness in the case of bilateral harm

This paper defies the widely held belief concerning the unambiguous superiority of negligence in settings of judgment proofness. We analyze a set-up with bilateral harm, bilateral care, and potential judgment proofness by one party to the accident. We establish that strict liability with a defense of contributory negligence can perform better than simple negligence and negligence with a defense of contributory negligence. It is shown that the former liability rule can better establish a discontinuity in individual costs conducive to inducing efficient care than the other rules.