Vicarious Liability Under a Strict Liability Rule

In this article, we extend the model of Newman, H., and D. Wright. 1990. “Strict Liability in a Principal-Agent Model.” International Review of Law and Economics 10: 219–231 and strengthens their result that the strict liability can attain social optimum in a principal-agent relation to the situation in which the court appreciates any contractual terms regarding apportionment of damages between an employer and an employee under vicarious liability rule. Our model also generalizes and extends vicarious liability to the negligence-based liability rule.

Strict Products Liability 2.0: The Triumph of Judicial Reasoning Over Mainstream Tort Theory

Strict products liability has evolved in a manner that is widely misunderstood. The liability rule was first formulated to govern defective products that did not minimally perform one of their ordinary functions as expected by consumers—a malfunction that violates the implied warranty of quality. After adopting this rule, courts began applying it to products that did not malfunction and found that a test for defect based on consumer expectations often is indeterminate or can otherwise unduly limit liability in an important class of cases. To address these problems, most courts adopted the risk-utility test, a form of cost-benefit analysis that functions like the negligence standard of reasonable care. Relying on these cases, the Restatement (Third) of Torts: Products Liability embraced the risk-utility test, jettisoned the consumer expectations test, and characterized strict products liability as a misleading label that perpetuates confusion about liability being strict when it instead is based on negligence. In response, a clear majority of courts have rejected this negligence-based framework and affirmed the continued vitality of strict products liability. Puzzled by this unexpected development, mainstream scholars claim that courts are confused by the rhetoric of strict products liability. The prevailing scholarly opinion about this matter is confused; its fixation on negligence ignores the implied warranty rationale for strict products liability. Having been largely formulated as a rule of contract law, the implied warranty is under-theorized as a tort doctrine. Once adequately developed, the tort version of the implied warranty shows why courts have transformed the rule of strict products liability from the last century into a more comprehensive regime—“strict products liability 2.0”—that relies on consumer expectations to incorporate the risk-utility test into the framework of strict products liability. As compared to ordinary negligence liability, the implied warranty defines the safety problem in the normatively appropriate manner, thereby sharpening the inquiry about what’s at stake. In dismissing this important development, mainstream tort theory relies on legal categories that fundamentally differ from the ones courts have used to develop strict products liability with analogical reasoning. Scholars have either resorted to overly general theories of tort liability or have otherwise focused on narrow doctrinal questions. By not engaging in the mid-level categorical theorizing required by analogical reasoning, the mainstream position could not see how this characteristic form of judicial reasoning has created the substantively sound regime of strict products liability 2.0.

Liability for robots II: an economic analysis

This is the second of two companion papers that discuss accidents caused by robots. In the first paper (Guerra et al., 2021), we presented the novel problems posed by robot accidents, and assessed the related legal approaches and institutional opportunities. In this paper, we build on the previous analysis to consider a novel liability regime, which we refer to as ‘manufacturer residual liability’ rule. This makes operators and victims liable for accidents due to their negligence – hence, incentivizing them to act diligently; and makes manufacturers residually liable for non-negligent accidents – hence, incentivizing them to make optimal investments in R&D for robots' safety. In turn, this rule will bring down the price of safer robots, driving unsafe technology out of the market. Thanks to the percolation effect of residual liability, operators will also be incentivized to adopt optimal activity levels in robots' usage.

Making Sense of the Arbitrator's Ruling in DS 316, EC and Certain Member States – Measures Affecting Trade in Large Civil Aircraft (Article 22.6-EC): A Jigsaw Puzzle with (at Least) a Couple Missing Pieces

‘The US won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory’, tweeted President Trump on 3 October 2019. The United States (US) won not only the highest amount of retaliation ever adjudicated in the history of the WTO but also an ongoing right to retaliate on an annual basis until such time as the EU had complied by either removing the subsidies it granted Airbus or somehow neutralizing their adverse effects on Boeing. In light of the facts of the case, this ruling has two major shortcomings. First, in sharp contrast with the statutory language and practice until now, the Arbitrator effectively introduced a permanent liability rule into the WTO system through the backdoor. Second, given the way the decision and the associated award has been written, it is simply impossible for the EU to comply because (a) the contested subsidies are no longer in existence and (b) no guidance has been provided on how the EU might go about removing their adverse effects on Boeing if it sought to achieve compliance. Thus, in all likelihood, the EU is saddled with a ruling that obligates it to cough up an annual sum of $7.5 billion USD for an indefinite time period.

Moral Reflections on Strict Liability in Copyright

Accidental infringement of copyright is a pervasive and largely ignored problem. In the twenty-first century, it has become increasingly easy to infringe copyright unintentionally. When such accidental infringement occurs, copyright law holds the user strictly liable. Prior literature has questioned whether the strict liability standard is normatively defensible. In particular, prior literature has asked whether the strict liability standard ought to be reformed for economic reasons. This Article examines the accidental infringement problem from a new perspective. It considers whether it is fair to hold copyright users strictly liable for accidental infringements of copyright. This Article argues that the strict liability standard is not fair because it results in copyright users being held liable for accidents for which they are not morally responsible. Using the moral philosophy literature on responsibility, this Article explores our intuitions surrounding copyright’s liability standard in order to better understand why strict liability in this context seems “harsh” and “inequitable.” In turn, this provides an argument for reforming copyright’s liability rule and adopting a negligence standard. This Article then argues that, within the United States, the proposed reform to copyright’s liability rule should be accomplished by modifications to the existing fair use doctrine.

Ontology-Based Liability Decision Support in the International Maritime Law

In this paper, we present an ontology-based liability decision support task in the international maritime law, specifically the domain of carriage of goods by sea. We analyze the liabilities of the involved legal agents (carriers and shippers) in case of loss or damage of goods. Thus, a well-founded legal domain ontology, named CargO-S, is used. CargO-S has been developed using an ontology-driven conceptual modeling process, supported by reusing foundational and legal core ontologies. In this work, we demonstrate the usability of CargO-S to design and implement a set of chained rules describing the procedural aspect of the liabilities legal rules. Finally, we employ these rules in a liability rule-based decision support task using a real case study.

Grounding the case for a European approach to the regulation of automated driving: the technology-selection effect of liability rules

In the current paper, we discuss the need for regulation at EU level of Connected and Automated Driving solutions (henceforth CAD) based on multiple considerations, namely (i) the need for uniformity of criteria across European Member States, and (ii) the impact that regulation—or the absence of it—has on the proliferation of specific technological solutions. The analysis is grounded on legal and economic considerations of possible interactions between vehicles with different levels of automation, and shows how the existing framework delays innovation. A Risk-Management Approach, identifying one sole responsible party ex ante (one-stop-shop), liable under all circumstances—pursuant to a strict, if not absolute liability rule—is to be preferred. We analyse the solution adopted by some Member States in light of those considerations and conclude that none truly corresponds to a RMA approach, and differences will also cause market fragmentation. We conclude that because legal rules determine what kind of technological application is favoured over others—and thence they are not technology-neutral—uniformity across MSs is of essential relevance, and discuss possible policy approaches to be adopted at European level.

Economic Analysis of Accident Law: A New Liability Rule that Induces Socially Optimal Behaviour in Case of Limited Information

In accident law, we seek a liability rule that will induce both the parties to adopt socially optimal levels of precaution. Economic analysis, however, shows that none of the commonly used liability rules induce both parties to adopt optimal levels, if courts have access only to ‘Limited Information’ on. In such a case, it has also been established (K. (2006). Efficiency of liability rules: a reconsideration. J. Int. Trade Econ. Dev. 15: 359–373) that no liability rule based on cost justified untaken precaution as a standard of care can be efficient. In this paper, we describe a two-step liability rule: the rule of negligence with the defence of relative negligence. We prove that this rule has a unique Nash equilibrium at socially optimal levels of care for the non-cooperative game, and therefore induces both parties to adopt socially optimal behaviour even in case of limited information.

On the Choice of Liability Rules

Legal assignment of liabilities for losses arising out of interactions involving negative externalities usually depend on which of the interacting parties are negligent and which are not. It has been established in the literature that, if negligence is defined as failure to take some cost-justified precaution then there is no liability rule which can always lead to an efficient outcome. The objective of this paper is to try and understand if it is still possible to make pairwise comparisons between rules on the basis of efficiency and to use such a method to explain/evaluate choices from a given set of rules. We focus on a set of five of the most widely analyzed rules (no liability, strict liability, negligence, negligence with the defense of contributory negligence and strict liability with the defense of contributory negligence), and use a binary relation according to which a rule in the set is considered to be at least as efficient as another if and only if the set of applications for which it is inefficient is a subset of the set of applications for which the other one is inefficient. We show that, with respect to the above mentioned relation, pairwise comparisons between rules in this set fail. The paper, thus, demonstrates that an efficiency based explanation for any choice from these five rules is not consistent with the notion of negligence defined as failure to take some cost-justified precaution.