6. Explain how the rule of joint and several liability works. Under what circums

Question

6. Explain how the rule of joint and several liability works. Under what circumstances is such a rule
likely to induce efficient behavior? Why? Be sure to include the concept of “contribution” in your
answer.
7. Explain how evidentiary uncertainty can affect the relative efficiency of comparative negligence and
negligence with a defense of contributory negligence. On balance, is there any reason to believe that
one rule is likely to be more efficient than the other? Why or why not?
8. Distinguish between compensatory damages and the risk-equivalent (Hand-rule) method of computing
damages. Under what circumstances is each method preferred? What problems are encountered with
each method?
9. Describe the conditions under which punitive damages should be awarded and be able to explain how
the amount of punitive damages should be computed. In particular, be able to demonstrate that
punitive damages, when used properly, can compensate for “enforcement error” and create incentives
for injurers to take an efficient level of precaution to avoid accidents.

Explanation / Answer

Multiple questions asked.

First question is answered below.

6.

When there are two or more people who are are liable in respect of the same liability, in most legal systems, then they may either be:

Under the rule of joint and several liability, when two or more parties are jointly and severally liable for a wrongful deed or act, then each party is independently liable for the complete injuries which arose from the act. Thus, if a victim wins a legal case against the parties collectively, then he has complete power to collect the full value of the injuries from any one of them.

For example if 2 people (A&B) in an agreement unintentionally harm another party X in an act, and if X legally wins the case against them, with the judge ruling the joint and several liability claim, then X can demand only A to pay the entire amount of loss. However, A can also ask B for the compensation, but if B disagrees to do so, then A will have to pay for the loss completely on his own.

Such a rule reduces the risk of other parties who work with the joint owners, as they can always claim the losses (if any) from either of them, which makes it efficient.

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