The Economic Analysis of Civil Law

The Economic Analysis of Civil Law

by Hans Bernd Schafer, Claus Ott

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ISBN-10: 1843762773

ISBN-13: 9781843762775

Pub. Date: 08/28/2004

Publisher: Elgar, Edward Publishing, Inc.

Schafer (economics, U. of Hamburg) and Ott (civil law U. of Hamburg) explain to students and practitioners how aspects of normative and positive economics relate to institutional economics, and how institutional economics relate to the practice of civil law. They examine the economic foundations of tort law, contract law, and property law, and show how economic theory


Schafer (economics, U. of Hamburg) and Ott (civil law U. of Hamburg) explain to students and practitioners how aspects of normative and positive economics relate to institutional economics, and how institutional economics relate to the practice of civil law. They examine the economic foundations of tort law, contract law, and property law, and show how economic theory affects wealth on the national level. Their topics include civil liability, issues of contract law including sales and warranty contracts and issues of good faith, and property rights, including intellectual property rights. The authors include examples, case studies, and lists of further reading for each chapter. This is an English translation of the original in German last published by Springer-Verlag in 2000. Annotation ©2004 Book News, Inc., Portland, OR

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Elgar, Edward Publishing, Inc.
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Product dimensions:
7.00(w) x 9.70(h) x 1.30(d)

Table of Contents

Part IFundementals
1.What is the Economic Analysis of Law?3
1.1Scarcity and Waste3
1.4New Institutionalism6
1.5Neoclassical Microeconomics7
1.7Distributive Justice8
1.8Alternatives to Efficiency9
1.9The Task of the Economic Analysis of Law11
2.Decisions, Consequences and Evaluation14
2.1Means and Ends14
2.2Consequentialism and Judge-made Law15
2.3Explanation, Prognosis and Evaluation16
2.4Evaluation of Judicial Decisions18
3.Social Welfare20
3.1Social Choice Theory20
3.3The Pareto Principle21
3.4Pareto Efficiency23
3.5Legal Policy28
3.6The Kaldor-Hicks Criterion28
3.7Efficiency, Utilitarianism and Other Moral Theories35
3.8Criticisms of Utilitarianism and Social Welfare Functions37
3.9Social Welfare Functions and Arrow's Impossibility Theorem38
3.10Categorical Decisions41
3.12The Practicability of Welfare-based Rules46
4.Rationality and Economic Behaviour50
4.1What is Economics?50
4.2Homo Oeconomicus51
5.The Market, Property Rights and the Law66
5.1The Theory of Demand66
5.2The Theory of Supply74
5.3Equilibrium Under Perfect Competition and Monopoly78
5.4Property Rights83
5.5Transaction Costs, Property Rights and the Coase Theorem86
5.6Market Failures: Changing in the Legal System96
5.7The Evolution of Legal Norms99
Part IICivil Liability
6.The Aims and Problems of Civil Liability107
6.2The Substance of Civil Liability109
6.3The Aim of Primary Cost Avoidance: the Properties of Optimal Prevention113
6.4Avoiding Secondary Costs (Risk Spreading)117
6.5Avoiding Tertiary Costs122
6.7Attribution of Damage123
6.8Legal Problems of Attributing Responsibility125
7.Negligence and Strict Liability in German Law134
7.1Introductory Remarks134
7.2The Consequentialist View of Negligence134
7.3The Learned Hand Formula135
7.4Negligence from a Legal Point of View136
7.5The Effects of a Negligence Rule143
7.6The Effects of Negligence under Partial Liability147
7.7Negligence and Dangerous Activities148
7.8Negligence in the German Courts150
7.9A Second Interpretation of Negligence154
7.10Pragmatic Principles and the Learned Hand Formula157
7.11The Burden of Proof for Negligence160
7.12The Relevance of Norms and Conventions162
7.13Strict Liability163
7.14The Effects of Strict Liability166
7.15The Cost and Organizational Implications of Strict Liability169
7.16Liability Caps under Strict Liability170
7.17Strict Liability and Unforeseeable Damages171
7.18Liability and Insurance172
8.Liability under Bilateral Damages177
8.1The Reciprocal Nature of Damages177
8.2The Legal Regulation of Bilateral Damages in German Civil Law178
8.3The Cheapest Cost Avoider179
8.4Efficient Precaution under Bilateral Damages and a Constant Level of Activity184
8.5Negligence and Bilateral Liability187
8.6Strict Liability and Bilateral Damages189
8.7Socially Detrimental Behaviour under Bilateral Liability190
8.8Recovery of Avoidance Costs193
8.9The Problem of Opportunism197
9.Causality and the Attribution of Damages200
9.1The Problem in Context200
9.2The Necessary and Sufficient Conditions for Liability in German Law201
9.3The Problem of Probabilistic Causality207
9.4The Limits of Probabalistic Causality218
10.Special Problems in Civil Liability221
10.1Product Liability221
10.2Environmental Liability240
10.3Compensation for Pain and Suffering245
10.4Vicarious and Employer Liability250
10.5Pure Financial Loss253
10.6Immaterial Losses259
10.7The Limits to Civil Liability and the Transition to Public Law261
Part IIIContract Law
11.Freedom of Contract, Contract Law and the Fully Specified Contract273
11.1Freedom of Contract273
11.2The Economic Function of Contract Law277
11.3The Fully Specified Contract278
11.4A Note on the Harmonization of European Contract Law293
12.Freedom of Contract and Market Mimicking Rules296
12.1Contractual Sovereignty and Allocative Efficiency296
12.2The Economic and Legal Model297
12.3Reconstructing the Fully Specified Contract by Contract Law (Default Rules)299
12.4Interpreting Contractual Terms301
12.5The Doctrine of the Inherent Basis of Contract303
12.6The Legal Relevance of the Fully Specified Contract306
12.7Case Studies308
13.Contractual Breach, Impossibility and Delay320
13.1The Legal Consequences of Disruption of Contracts320
13.2Legal Remedies for Breach and Delay321
13.3The Heuristics of Rules for a Breach of Contract323
13.4Assessing German Rules325
13.5The Subjectivist Critique of the Doctrine of Efficient Breach329
13.6Compensatory Damages and Foreseeable Losses332
14.Warranty Contracts336
14.1Legal Redress336
14.2The Basic Problems of Warranties337
14.3Warranty as an Insurance Policy338
14.4Warranty Law as an Incentive for Product Quality339
14.5Warranty as a Quality Signal340
14.6Limited Warranty341
14.7Cost Comparisons of Alternative Rules343
14.8Compensatory Damages for Defective Wares344
14.9Statutory versus Contractual Warranty346
14.10Proposals for an Efficient Statutory Warranty Law349
14.11Contractual Remedies and Risk Behaviour353
15.Ignorance, Trust, Opportunism and Efficiency355
15.1The Problem of Trust355
15.2Productive and Unproductive Information356
15.3Information Costs under Price and Quality Uncertainty358
15.4Adverse Effects under Information Deficits360
15.5Overcoming Information Deficits with Social Institutions364
15.6The Danger of Opportunism368
15.7Consumer Protection: Standard-form Contracts and the 'Market for Lemons'370
16.The Protection of Good Faith375
16.1The Problem of the Protection of Good Faith375
16.2The Economic and Legal Meaning of the Principle of Good Faith381
16.3Liability for Breach of Good Faith382
16.4The Practical Importance of the Economic Approach to the Protection of Good Faith385
16.5Price and Quality Uncertainty386
16.6Legal and Economic Problems of Professional Expertise394
Part IVProperty Rights
17.Basic Issues in Property Rights401
17.2Efficiency and the Misspecification of Property Rights404
17.3Property Rights and Scarcity409
17.4Transferability of Property Rights412
18.The Involuntary Transfer of Property Rights418
18.1Bona Fide Transfer418
18.2Regulatory Takings421
18.3The Transfer of Property Rights and Creditor Conflicts431
19.The Inefficient Use of Real Estate440
19.1The Nature of the Problem440
19.2The Sole-owner Principle440
19.3Second-best Solutions under Incomplete Information441
19.4An Example from German Law442
19.5The Limits to Regulation by Civil Law447
20.Intellectual Property Law and Innovation449
20.1Competition in Goods and Ideas449
20.2Intellectual Property Rights450
20.3The Priority Principle451
20.4The Effect of Risk452
20.5Patent Enforcement and its Effect on R&D453
20.6The Effects of Licensing Contracts454
20.7Compulsory Licences455
20.8The Extent of Patent Protection455
20.9State Support for Innovation456
20.10Copyright and Copying Laws457

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