The Principle of Full Compensation in Tort Law

According to the principle of full compensation, tort law seeks to put the victim in the position he was in before the tort. This position is generally considered to be the situation where the victim does not suffer any harm at all. We consider an alternative interpretation. If an injurer takes due care, the victim is faced with expected harm. This can be considered the victim's expected harm in the situation he was in before the tort. Thus conceived full compensation requires a negligent injurer to pay damages which bring the (potential) victim ex ante in the same position as the victim was in the case where the (potential) injurer takes due care. We investigate the consequences of this restated negligence rule. For due care levels larger than efficient care, the standard negligent rule may lead to excessive care, whereas the restated negligent rule always leads to efficient care. Furthermore, the activity level under the restated negligent rule is greater than the activity level under the standard negligent rule, which itself is greater than the efficient activity level. Social welfare under the restated negligence rule can either be higher or lower than social welfare under the standard negligence rule.     

Comparative Causation

This article examines the criterion of comparative causationaccording to which an accident loss is apportioned between afaultless tortfeasor and an innocent victim on the basis oftheir relative causal contributions to the loss. To explainthe rule's structural features, we consider a scenario whereliability is allocated on the basis of causation, regardlessof fault. While this model brings to light several interestingfeatures, it also unveils the limits of such a criterion withrespect to induced activity and care levels. Next we extendthe model to consider the comparative causation rule in conjunctionwith negligence rules. Applying the comparative causation ruleunder a negligence regime induces a combination of incentivesthat is not provided by any known liability rule.     

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.     

Negligence standards and care levels when damages depend on sales prices

In standard models on negligence rules, due care levels can be used for fine-tuning the care levels of potential injurers, and there are good arguments why care levels should vary among different fields. We extend the analysis of the impact of due care on care actually chosen to situations where damages depend on sales prices. This is the case for many contractual relationships, but also for damages on capital markets which are usually calculated as the difference between share prices paid and share prices after the adverse information becomes public. In a model with errors in court, we show that tighter negligence standards may even reduce care levels chosen by potential injurers under reasonable circumstances. Due to this counter-intuitive effect, negligence standards can hardly be applied for fine-tuning the care levels of potential injurers when damages depend on prices.     

Screening accident victims

This paper considers victim heterogeneity in harm levels in a bilateral-care model, where harm is private information. In practice, resources are expended on the verification of damages suffered. We establish a sufficient condition for the possibility to accurately deduce the harm level from the observable care choice without spending on verification. For cases in which this condition does not hold, this paper sets out a simple screening mechanism that induces victims to reveal their type truthfully and induces optimal care in equilibrium without verification costs.     

Double Discounting: The Effects of Comparative Negligence on Mock Juror Decision Making

Two experiments were conducted to ascertain the effects of comparative negligence on damage awards. Participants awarded damages for a mock medical malpractice case in which the level of the plaintiff's negligence was varied. Both experiments showed that damage awards were doubly discounted for partially negligent plaintiffs. Experiment 1 also found that the responses of college students did not differ from those of people who had been called for jury duty. Experiment 2 examined four components of the damage award and showed that the reduction due to the level of the plaintiff's negligence occurred only in damages for bodily harm. Implications for the judicial system are discussed.     

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.     

法国法上的重大过错——兼论对中国法的参照意义

法国法上的重大过错包括重大过失、不可原谅之过失以及故意或欺诈性过错。重大过失主要意义在于部分场合下排除责任限制条款的适用;不可原谅之过失主要适用于劳动事故及职业病、运输损害、交通事故领域,用以加重行为人责任或削减受害人权利;故意或欺诈性过错之意义在于一般性地排除责任限制条款的适用。三种过错的识别,从侧重客观因素的考察到侧重主观因素的考察。基于法国法的相关经验,我国《合同法》第113条及《工伤保险条例》相关规定均有值得检讨之处。     

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.”     

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.     

Environmental risks,the judgment-proof problem and financial responsibility

This paper examines a setting in which a firm is liable to pay environmental damages caused by its activity but may not have sufficient wealth for repair of damages. In order to induce the full internalization of the environmental cost, the firm is required to demonstrate a financial guarantee from a solvent party that covers this cost. Since the firm and the guarantor are joint liable for the harm caused by the firm, it is in the interest of the guarantor to design the guarantee contract in order to induce the firm to take an adequate level of prevention. First, I show that financial responsibility regime may achieve the social optimum. Secondly, I identify a particular form of contract in the set of contracts which induce the socially optimal level of prevention. This contract is closed to an alternative risk transfer product referred to as the spread loss treaty.     

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.

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。     

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.     

Road Traffic and Efficient Fines

Road traffic is a typical example of an occupation with bilateral care and activity choices. In such a setting, common liability rules which simply divide damages cannot induce efficient outcomes. It is shown that fines for the violation of traffic regulations which depend on the occurrence of an accident can induce optimal behaviour. The properties of such efficient fines are derived. In particular, efficient fines tend to increase more than proportionally with the severity of an offence, while fines for repeat offenders can rise at a decreasing rate with the number of violations. To evaluate the scope for efficiency-enhancing reforms of fine systems, it is investigated whether actual regulations particularly for speeding conform to the non-proportionality requirement in selected European countries.     

Welfare improving ignorance and negligence rule

The literature considers that the ignorance of activity levels by the courts is a major source of inefficiency to minimize the social costs of accidents. In this paper, we show that the inefficiency of the negligence rule based on a standard of care (and correlatively ignoring the activity level) is not established if certain dimensions of care are not verifiable. In other words, if care and activity levels are the only relevant variables of the injurer's set of actions to reduce the risk of accident, it is true that inefficiency arises when the court ignores one element of this set. But, considering that some dimensions of care are in practice not verifiable, it can be efficient for the judge not to take into account the activity level of the defendant. We propose a simple model with three variables: observable and unobservable precautionary measures and activity level.

Effect of Blameworthiness and Outcome Severity on Attributions of Responsibility and Damage Awards in Comparative Negligence Cases

We studied the effects of accident victims' legal blameworthiness and the severity of their injuries on determinations of responsibility and damage awards. In general, participants tended to ascribe more fault to victims than warranted by the facts presented, displaying an antiplaintiff bias. When attributing fault and awarding damages, they were especially sensitive to the blameworthiness of the victim when the consequences of the accident were severe rather than mild. These findings appeared not to be mediated by emotional reactions to the victims. Participants tended to conflate issues of liability with what ought to have been the legally distinct question of damages. They appeared to decide comparative negligence awards not by determining percentage fault and gross damages as discrete items and then computing their product, as the law prescribes, but rather by using more holistic judgmental processes.     

The reasonable person standard: a new perspective on the incentive effects of a tailored negligence standard

This paper compares the effects of a uniform reasonable person standard to a due care standard that is tailored to individual capabilities. This is done in a framework in which potential injurers can invest in developing greater capability. I show that the uniform reasonable person standard may induce better or worse investment incentives, depending on whether greater capability is represented by reduced precaution costs or reduced accident costs. In so doing, I show that recent results showing that the reasonable person standard creates better investment incentives are not general, but depend on the model of injurer capacity used. I go on to show the availability of “over-tailoring” of the negligence standard as a novel form of subsidy for investment in care technology. In some circumstances, holding an injurer to a lower standard of care than would be optimal in a perfectly static world can result in a trade-off between dynamic and static efficiency that is superior to that generated by either a uniform or tailored standard of care.     

Tort Law for Cynics

Tort scholars have in recent years defended a ‘traditional’ or ‘idealist’ view of tort law. In the context of negligence this implies that the holder of a duty of care must make an effort not to violate that duty. Idealists contrast this with a ‘cynical’ view that having a duty of care implies a legal requirement to pay damages for breach of that duty. This article defends the cynical view, arguing that it easily explains doctrines supposedly only explicable from an idealist perspective, and that many aspects of tort law are hard to reconcile with idealism. Empirical constraints often make idealism, even if it were desirable, unattainable, and cynicism is therefore the more honest view. The article argues that idealism is often undesirable, having costs, both pecuniary and non‐pecuniary, which are often ignored, and that therefore it is sometimes better if certain torts take place (and are compensated) than if they do not happen.     

Ensuring Insurance for Foster Care: Requiring Foster Parents to Obtain Liability Insurance to Cover Harm Done to Foster Children in their Care

This Note proposes that all states should require that foster parents have liability insurance before children are placed in their care. This Note also proposes that the liability insurance needs to cover not just harm to third parties but also harm to the foster children through the negligent acts of the foster parents. This legislation will allow foster children to have standing to bring claims against their foster parents and insurance companies and give them a greater opportunity for recovery. Currently, the policies and statutes governing the policies in place do not cover all types of harm that can occur during the foster parent–child relationship. Certain policies leave children who are harmed by their foster parents’ negligence unable to recover any damages from the people who have harmed them. Because foster parents can be left to defend the actions themselves, they often become judgment proof due to their low income, leaving the children who are harmed with little chance of recovery.

Key Points for the Family Court Community:
• States need to require foster parents to obtain liability insurance, which covers harm done by the foster children to third parties, harm to the home, and any harm done to the child by the foster parents.