STRICT TORT LIABILITY: ECONOMIC ANALYSIS |
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Author |
 Karnaukh B. P., PhD in Law, Associate professor, Kharkiv, Pushinska, 77 |
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In heading |
Economic analysis of law; | ||||
Signed print |
22.05.2015 | Issues number |
2015 - № 2 (21) | Page |
122-132 |
Type of articles |
Scientific article | Code UDK |
347.511 | ISSN print |
2411-5584 |
Abstract |
Problem setting. It seems self-evident that everyone should be obliged to pay for losses he caused to another only if he is at fault. On the contrary it is rather difficult to justify the rule of strict liability from the standpoint of common-sense fairness. The justification for strict liability demands much more sophisticated inquiry into the subject matter. Helpful guidance to resolve the problem is provided by law and economics. Recent research and publications analysis. Different regimes of tort liability, and in particular the regime of strict tort liability, were studied by law and economics scholars, such as G. Calabresi, J. Coleman, R. Coase, W. M. Landes, G. Mendlow, R. Posner, H.-B. Schäfer, A. Schönenberger and others. Unfortunately in Ukrainian law science the law and economics has not developed yet. And that is why studies which demonstrate heuristical potential of law and economics approach are in need. Paper objective. The main objective of the paper is to find out an economic sense of strict tort liability by comparing its distributional effects with distributional effects of faultbased liability. Paper main body. Both strict and fault-based tort liability should be seen from the two points of view: a) regarding their preventive effect that is how the each regime stimulates potential defendants to take reasonable precautions; b) regarding allocative effects of each regime that is how the application of each regime influences the allocation of welfare in society. Economic analysis proves that from the first point of view both regimes have similar effect: both of them induce potential defendants to take all reasonable precautions to prevent damage. However the two regimes differ in their allocative consequences. Thus the regime of strict liability makes the defendants activity more expensive; whereas faultbased liability makes the plaintiffs activity more expensive. In other words, damage caused to others by the activity of someone without his fault turns out to be the negative externality of such an activity providing that fault-based liability is the case. Conclusions of the research. Both strict and fault-based tort liability have similar preventive effect: both of them induce potential defendants to take reasonable, i.e. costjustified, precautions to prevent causing damage to others. At the same time, only strict liability, but not the fault-based, ensures that the agent of some activity will internalize all the costs the activity entails for society. That is why only strict liability makes the private cost of providing some activity to be equal to the social cost of providing it. |
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Keywords |
Law and economics, tort liability, strict tort liability, fault. | ||||
Reviewer |
Jarocki V . L., doctor of legal Sciences, Professor, member-correspondent of national Academy of Law of Ukraine, Yaroslav Mudryi National Law University, Kharkiv, Ukraine. | ||||
External reviewer |
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Article in PDF |
2 122-132 | ||||
Bibliography |
none | ||||
Code DOI |
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This post is also available in: Ukrainian
27.03.2015
