strict liability

strict liability

Strict liability is more appropriate for an activity where that activity may destroy the evidence of its fault, or where transaction costs are so high that no pre-judgment bargaining is possible. Conversely, strict liability is less appropriate where the information costs to know about the activity's possible third-party risks are too high, so that the activity-owner cannot face any real deterrence to his actions. (NL case for mink babies killed by mother scared by blasting noise).

Strict liability is also useful where current technology cannot prevent a risk imposed by the defendant on others. See [American Cyanamid] (no strict liability for leaking chemicals from trains where extra care could have prevented such leaks)

However, a strict liability rule can work as a property rule where post-judgment bargaining is possible. (See Levmore's example of doctors who accidentally killed under the code of Hammurabi; the official penalty was to cut off the surgeon's hands, but victims' families could accept monetary compensation instead.) However, strict liability can work ex ante to prevent strategic or unseemly bargaining around a negligence rule. (ex. if cargo-owners could pay ship captains to throw others' goods overboard in case of a storm).

Strict liability also applies to the doctrine of [respondeat superior]: an employer is strictly liable for the acts of the employees because employers cannot hire judgment-proof employees, and since simply bringing people together in the course of employment pools and thus magnifies the risk imposed on others. [Ira Bushey and sons v US] (L where drunken sailor turned drydock wheels, destroying drydock and ship)

See Epstein restatement to the Coase Theorem
See also negligence for comparison of negligence v. strict liability

[icon: tux]
[alias: strictly liable]