Civil Liability: Law and Economics Outline

The article is devoted to the research of civil liability through the alembic of law and economics. The author tries to show that juridical rules and ideas are clear enough to be put in mathematical terms; he aims to prove that law is the justice math. The main tool for meeting that goal is economic analysis of law. The article introduces the main statements of law and economics theory concerning the problem of civil liability. Liability in civil law is considered to be the mechanism of allocating costs. As demonstrated by law and economics the total amount of costs, related to the facts of rights violation, includes two main summands: damage sustained by plaintiffs and costs of precautions fulfilled by defendants. In this respect both summands depend on the level of care exercised by defendants. The purpose of civil liability is to minimize the total sum of costs, caused by the facts of rights violation. By the means of civil liability plaintiffs can shift their losses on defendants. But for the damages to be allocated on a defendant, sufficient reason should be proven before the court. Such a reason includes four elements, which are called the preconditions of civil liability or elements of civil offence. They are: misconduct, damage, causation and fault. These four ingredients constitute the fact at issue in cases where plaintiffs seek for compesation of damage caused. The statements of scientific doctrine concerning the set of elements of civil offence are formalized by using logical symbols. Every element of civil offence is worth to be the subject of distinct scientific research. But the author concentrates on the concept of fault. In this regard the author shares and elaborates so-called behavioral theory of fault. Thus fault is defined as juridical concept, the content of which consists in stating that the wrongful act was committed in situation of free choice, wherein the rightful variant of behavior was available and reasonably expected. In other words one is considered to be at fault if he did not take the precautions, which could be reasonably expected from him in the situation. So the main question is to decide what precautions could be treated as reasonable. The concept of fault is the same for both contract and tort law, but the criterion of reasonable expectation differs in those two areas of law. The difference between reasonable expectations in tort and contract law is specified. Thus in tort law reasonable expectations demand from potential injurer to take only costjustified precautions. Cost-justifiability of precautions is estimated on the basis of Hand’s formula. Within the realm of contract law in contrast it is reasonable to expect performance from a debtor nevertheless such a performance could be not profitable or even loss-making for him.