Tortious Law and Econ – An Automobile Accident Examplehttps://www.horwitzlaw.com/wp-content/themes/osmosis/images/empty/thumbnail.jpg 150 150 Clifford Horwitz Clifford Horwitz https://secure.gravatar.com/avatar/889d7f53aa656ffde8899fceb98167be?s=96&d=wp_user_avatar&r=g
Tort comes from a French word that means injury. Tortious law from an economical point of view covers situations when the transaction cost of bargaining is too high for both parties to agree in advance.
What do I mean by agree in advance? Two economists, Robert Cooter and Thomas Ulen state tort law is; “the attempt to make injurers internalize the externalities they cause, in situations where transaction costs are too high to do this through property or contract rights.” So, let’s think about this with an example, say an automobile accident. Under contract law, you and a person would make a contract saying that the person cannot hit you. However, it would be impossible to have an agreement or promise before an accident that states what will happen in the event of an accident that both parties agree to. Even more impossible would be to have a contract with every other possible driver.