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Unformatted text preview: The Economics of Tort Law I n a general sense, a tort is a wrong and a tortious act or omission is a wrongful act or omission. Tort law is mainly common law (judge-made law) but it is altered more and more by statute. Each tort cause of action has its own name and definition, defenses, rules of liability, and damages. Injurer (I) harms Victim (V) (tortfeasor - defendant) (plaintiff) Intentional tort- an injurer intentionally causes harm to the victim, such as Joe Potatoes hits Jim Bloggs (e.g. # 1). I t can be a crime as well as a tort. Most torts analyzed in this class are unintentional torts . Unintentional tort- an injurer inadvertently causes harm to the victim in an accident, such as the case of the three pheasant hunters (e.g. # 2). The Economic Essence of Tort Law Property law & contract law facilitate cooperation among people for some kinds of harm that one party imposes on another. For other kinds of harm, however, the costs of bargaining (i.e. transaction costs ) are too high for cooperation to occur. E.g. drivers on a congested expressway cannot all contract with each other about how to allocate the costs of future accidents. Thus, there is a need for the additional area of the law called tort law . Cooter & Ulen point out that: “The economic essence of tort law is its use of liability to internalize externalities created by high transaction costs.” The T raditional Theory of Tort Liability Three elements were required for a plaintiff to recover damages under the traditional theory of tort liability: 1. The plaintiff had to have suffered harm . 2. The defendant’s act or failure to act had to have caused the harm. 3. The defendant’s act or failure to act must have constituted the breach of a duty owed to the plaintiff by the defendant. 2. Cause “Cause-in-fact” We can use the “but-for test” to see if A was the cause-in-fact of B: ask the question, “but for A, would B have occurred?” If the answer is no, B would not have occurred if A had not taken place, then A is the cause-in-fact of B. If there are multiple causes of harm, the “but-for” test may be misleading or meaningless [e.g. Jim Bloggs dodges Joe’s punch and steps on rotten floor boards and falls and breaks his nose]. The “but-for” test also has the weakness that it treats remote causes as equally important to more immediate causes of harm [e.g. Mother Goose rhyme “For want of a nail, the shoe was lost; For want of a shoe, the horse was lost; . . . And all for the want of a horseshoe nail]. 3. Breach of a Duty Some causes of action in torts require that a plaintiff show breach of a duty owed to him before he can recover while others do not require this. A rule of liability based only on (1) harm and (2) proximate cause is called a strict liability rule....
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This note was uploaded on 09/11/2011 for the course ECON 4723 taught by Professor Jadlow during the Spring '11 term at Oklahoma State.
- Spring '11