Law Commons^™

The Social Cost Of Contract, David A. Hoffman, Cathy Hwang

All Faculty Scholarship

When private parties perform contracts, the public bears some of the costs. But what happens when society confronts unexpected contractual risks? During the COVID-19 pandemic, completing particular contracts—such as following through with weddings, conferences, and other large gatherings—will greatly increase the risk of rapidly spreading disease. A close reading of past cases illustrates that when social hazards sharply increase after formation, courts have sometimes rejected, reformed, and reinterpreted contracts so that parties who breach to reduce external harms are not left holding the bag.

This Essay builds on that observation in making two contributions. Theoretically, it characterizes contracts as bargains …

Governing Disasters: The Challenge Of Global Disaster Law And Policy, Eric A. Feldman, Chelsea Fish

All Faculty Scholarship

This chapter uses the analytical framework of transnational legal ordering (TLO) developed by Halliday and Shaffer and applies it to the area of law and disasters. In contrast to the increasingly transnational legal nature of social ordering highlighted by Halliday and Shaffer, it argues that the emergence of transnational regulatory networks and cross-border principles or policies in the area of disaster management has been uneven and incomplete. Although there are many factors that help to explain why the law/disasters area has resisted the trend toward “transnationalization,” two stand out. One is the relative dearth of national laws and policies governing …

Discounting And Criminals' Implied Risk Preferences, Murat C. Mungan, Jonathan Klick

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It is commonly assumed that potential offenders are more responsive to increases in the certainty than increases in the severity of punishment. An important implication of this assumption within the Beckerian law enforcement model is that criminals are risk-seeking. This note adds to existing literature by showing that offenders who discount future monetary benefits can be more responsive to the certainty rather than the severity of punishment, even when they are risk averse, and even when their disutility from imprisonment rises proportionally (or more than proportionally) with the length of the sentence.

Collateral Consequences And The Preventive State, Sandra G. Mayson

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Approximately eight percent of adults in the United States have a felony conviction. The “collateral consequences” of criminal conviction (CCs) — legal disabilities imposed by legislatures on the basis of conviction, but not as part of the sentence — have relegated that group to permanent second class legal status. Despite the breadth and significance of this demotion, the Constitution has provided no check; courts have almost uniformly rejected constitutional challenges to CCs. Among scholars, practitioners and mainstream media, a consensus has emerged that the courts have erred by failing to recognize CCs as a form of additional punishment. Courts should …

Regulation By Liability Insurance: From Auto To Lawyers Professional Liability, Tom Baker, Rick Swedloff

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Liability insurers use a variety of tools to address adverse selection and moral hazard in insurance relationships. These tools can act on insureds in a manner that can be understood as regulation. We identify seven categories of such regulatory activities: risk-based pricing, underwriting, contract design, claims management, loss prevention services, research and education, and engagement with public regulators. We describe these activities in general terms and then draw upon prior literature to explore them in the context of five areas of liability and corresponding insurance: shareholder liability, auto liability, gun liability, medical professional liability, and lawyers’ professional liability. The goal …

The Law And Economics Of Liability Insurance: A Theoretical And Empirical Review, Tom Baker, Peter Siegelman

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We survey the theoretical and empirical literature on the law and economics of liability insurance. The canonical Shavell model predicts that, despite the presence of some ex ante moral hazard (care-reduction by insureds), liability insurance will generally raise welfare because its risk-spreading gains will likely be larger than its adverse effects on precautionary activities. We discuss the numerous features of liability insurance contracts that are designed to reduce ex ante moral hazard, and examine the evidence of their effects. Most studies conclude that these features work reasonably well, so that liability insurance probably does not generate substantial ex ante moral …

Making Sense Of The New Financial Deal, David A. Skeel Jr.

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In this Essay, I assess the enactment and implications of the Dodd-Frank Act, Congress’s response to the 2008 financial crisis. To set the stage, I begin by very briefly reviewing the causes of the crisis. I then argue that the legislation has two very clear objectives. The first is to limit the risk of the shadow banking system by more carefully regulating the key instruments and institutions of contemporary finance. The second objective is to limit the damage in the event one of these giant institutions fails. While the new regulation of the instruments of contemporary finance—including clearing and exchange …

The Shifting Terrain Of Risk And Uncertainty On The Liability Insurance Field, Tom Baker

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Recent sociological and historical work suggests that insurance risks often are not reliably calculable, except in hindsight. Insurance is “an uncertain business,” characterized by competition for premiums that pushes insurers into the unknown. This essay takes some preliminary steps that extend this insight into the liability insurance field. The essay first provides a simple quantitative comparison of U.S. property and liability insurance premiums over the last sixty years, setting the stage to make three points: (1) liability insurance premiums have grown at a similar rate as property insurance premiums and GDP over this period, providing yet another piece of evidence …

Insurance In Sociolegal Research, Tom Baker

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Insurance has a long history in sociolegal research, most prominently as a window on accident compensation and related tort law in action. Recent work has extended that research, with the result that tort law in action may be the best mapped of any legal field outside criminal law. Sociological research has begun to explore insurance as a form of governance, with effects in many legal fields and across the economy. This essay reviews developments in both bodies of work. Part one examines the relationship between liability insurance and tort law in action using the metaphors of window and frame. Part …

Predicting Corporate Governance Risk: Evidence From The Directors' & Officers' Liability Insurance Market, Tom Baker, Sean J. Griffith

All Faculty Scholarship

No abstract provided.

Protecting The Environment: Finding The Balance Between Delaney And Free Play, Geoffrey C. Hazard Jr., Howard C. Kunreuther

All Faculty Scholarship

No abstract provided.

On The Genealogy Of Moral Hazard, Tom Baker

All Faculty Scholarship

No abstract provided.

Tort Law As A Comparative Institution, Claire Oakes Finkelstein

All Faculty Scholarship

No abstract provided.