EC410 Final Exam Study Guide University of Alabama EC 410
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Module
EC 410
Institution
EC 410
What Will the Exam Be Designed to Do?
Assess your understanding of legal concepts
Application of the Central Concepts
Ability to develop economic analysis of situations from reading of case/facts
A Few Central Concepts for Law and Economics
1. EfficiencyMB = MC...
ec410 final exam study guide university of alabama ec 410
what will the exam be designed to do assess your understanding of legal concepts application of the central concepts ability to de
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EC 410
What Will the Exam Be Designed to Do?
Assess your understanding of legal concepts
Application of the Central Concepts
Ability to develop economic analysis of situations from reading of case/facts
A Few Central Concepts for Law and Economics
1. EfficiencyMB = MC / Pareto Optimality = Efficiency
2. The Coase Theorem
3. Calabresi-Melamed Concept: Property Rules vs. Liability Rules (Coase
Theorem redux)
4. Optimal Deterrence
The role of damages
What is the effect of compensatory damages? What is the effect
of punitive damages/ Damage Multipliers (see Polinsky
Shavell argument in your textbook)
[Becker and the Deterrence of Crime]
Legal Concepts From Tort Law
No breach of contract, no damage to property, or harm to enjoin
Negligence cases as well as intentional wrongs which result in harm
Transactions costs are high (as compared to low in Coase Theorem)
Use of liability to internalize externalities created by high transactions costs
Plaintiff must have suffered harm
Defendant’s act or failure to act must cause harm
Defendant’s act or failure to act must constitute a breach of duty owed to the
plaintiff by the defendant
Liability Standards
Negligence - Holds injurer liable for accidents that he causes if, and only if,
precaution is below the legal standard, regardless of victim’s level of precaution
Strict Liability –Gives victim no incentives for precaution (indifferent
between accident/compensation or accident not occurring)
Injurer internalizes marginal costs/benefits and gives incentives for efficient
precaution
No Liability – causes victim to internalize the marginal costs and benefits of
precaution which gives victim incentives for efficient precaution
Injurer has no incentive to take precaution
Variations with Contributory Negligence; with Comparative Negligence
Contributory imposes duty of care upon victim
Simple negligence with defense of contributory negligence – one party responsible for
costs of accidental harm even though both parties are at fault
Comparative – damages in proportion to contribution of negligence to accident
Standards of Proof
This study source was downloaded by 100000858936669 from CourseHero.com on 02-04-2023 15:29:45 GMT -06:00
, Preponderance of the Evidence – More convincing evidence, not on amount of
evidence
Clear and Convincing Evidence – Higher level of proof; evidence must be
more likely to be true than not; higher degree of believability
Beyond a Reasonable Doubt - highest standard; no other logical explanation
can be derived from the facts except that the defendant committed the crime
Res Ipsa Loquitur (as seen in Escola v. Coca-Cola)
Infers negligence from the very nature of an accident/injury, in absence of
how the defendant behaved
Injury is the kind that doesn’t ordinarily occur without negligence
Injury caused by an agency or instrumentality within exclusive control of
defendant
Injury causing accident is not due to any voluntary action or contribution
on part of plaintiff
Defendant’s non negligent explanation doesn’t completely explain
plaintiffs injury
Hand Rule (from US v. Carroll Towing)
Injurer is negligent if the marginal cost of precaution is less than the
resulting marginal benefit
Applications of Efficiency to various areas of the law
Examples:
Efficient Breach of Contract – parties should feel free to breach and
pay damages as long as result is more economically efficient that
performing under the contract
Specific Performance vs. Damages
Optimal Reliance (Promissory Estoppel) - Reliance damages awarded;
prevents one party from withdrawing a promise made to a second party if
they have reasonably relied on the promise (promise made, evidence of
change in position due to promise; inequity if promisor were to go back on
promise)
Gratuitous promise – unilateral obligation; one party gets nothing from the
other party in return for a service
Moot Court Cases and Issues
Kelo Case—Eminent Domain and Economic Development
Kirtsaeng Case—Copyright protection vs. Dissemination of Ideas
(Private vs. Public)
Exxon Case—Punitive Damages (Tort Reform Issues)
Moore Case - Property Interests in Body Parts/Tissues (related: Organ
Markets)
Cases:
Negligence - Hendricks v. Peabody Coal Co.
Strip mine closed in 1955; incident happened in 1960
Dove into a strip mine area and broke his neck when he hit the bottom
of the water. Permanently disabled.
This study source was downloaded by 100000858936669 from CourseHero.com on 02-04-2023 15:29:45 GMT -06:00
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