| Abstract: | The doctrine of successor liability transfers tort liabilityarising from the seller's past conduct from the seller to thebuyer. If the buyer has as much information about the liabilityas the seller, all beneficial acquisitions take place and theseller takes the efficient level of precaution. However, ifthe seller has more information about the liability than thebuyer, not all beneficial acquisitions are consummated and theseller takes a suboptimal level of precaution. I argue that,in the presence of information asymmetry, the courts shouldincrease the damages against the (potential) seller to providebetter incentives to take precaution while decreasing the damagesagainst the buyer to encourage more beneficial asset sales. |
