Using economic principles, analyse the law of obligation (Negligence) Essay

Using economic principles, analyse the law of obligation (Negligence) - Essay Example Economic analysis of law uses microeconomic hypotheses to examine rules of negligence and obligation. Economic analysis of law brought at the centre of academic discourse by Richard Posner in 1973 in The Economic Analysis of Law. His work paved the way for precise legal debates on the economic analysis of the law and laid strong foundations for subsequent literature on the economic analysis of the law of negligence. There have been several writers on the economic analysis of the law, some with same viewpoints and same with variations on how law should be affected by economics1. For example, Friedman calls for an economic analysis of law for the simple reason that there should be some strong connection liking effectiveness and justice. He believes that effectiveness stands at the centre of what economics provide today and for this reason, it is better if economic ideas can shape the law. Friedman further asserts that economics is a deep-seated issue is the connotation of reasonable ch oice, and therefore, an indispensable tool for sculpting the outcomes of legal rules. Wolfgang on his part states that economic analysis of the law means that there should always be awareness on the issue of why, along with how human interactions can be guided effectively by the law. He believes economic tools can be used to guide human actions, with particular attention to obligations owed towards others. 3. One yet school of thought is that posited by Mitchell and Shavell who believe that there should and for all times, be a good probability for the imposition of sanctions on negligent behaviour. Economic analysis will therefore guide the magnitude and form of these sanctions so that eventual liability would cause deterrence on the part of the torfeasor.4 Much debate about economic analysis of law has been also been propounded by Ronald Coase (1961)5, Guido Calabresi (1961)6, Commons [1924]7, Hale [1952]8 as well as Richard Posner [1973]9 with controversial ideas in his assertion that rules of common law are efficient and that rules of law must be efficient. He explains â€Å"efficient† to mean compliance to pay. In trying to have comprehensive understanding of these, Kornhauser (1984, 1985)10 brings two assertions: efficient rules are selected for legal processes and people are motivated to fear the law because of its economic consequences. These assertions however, do not match up unswervingly to conventional questions in the philosophy of law because normativity and the requirement to comply with the law are not openly looked at. Economic analysis of law will use a policy perspective to make this evaluation and this angle of reasoning often absolutely adopt some alternative of legal positivism. Analyzing the behavioral effects of the law, it is posited that the law is clearly known only by judges rather than the subjects of the law. Of course, there is strong reason for wanting to believe that the present American tort law supports the basis for th e economic analysis of the law. This particularly relates to the section of economically analyzing the law often called wealth maximization stating that there must be equality of positions between the plaintiff and defendant. This is very true if the plaintiff is thinking of productively benefiting from the negligence of breach of obligations on the part of the defendant. Amartya says: â€Å"The need for incentives may be rightly seen as including an element of blackmail. It would typically include the claims to higher reward for the better endowed and the more productive, who can decide to do less of those of their activities that benefit others, unless they receive more ‘compensation’. If this connection does actually work this way, then an uncompromising pursuit of equality may be self-defeating. Blackmail or not, the incentive connections must be taken into account by someone trying to promote equality†.11 In the late 19th century, economic analysis