An Economic Rationale for the Legal Treatment of Omissions in Tort Law

Abstract

This paper provides an economic justification for the exemption from liability for omissions and for the exceptions to this exemption. It interprets the differential treatment of acts and omissions in tort law as a proxy for a more fundamental distinction between harms caused by multiple injurers each of whom can single-handedly prevent the harm (either by acting or failing to act) and harms caused by a single injurer (either by acting or failing to act).

Since the overall cost to which a group of injurers is exposed is constant, attributing liability to many injurers reduces the part each has to pay and consequently reduces one's incentives to take precautions. The broad exemption from liability for omissions is a way of carving a simple, practical rule to distinguish between the typical cases in which an agent can be easily selected and provided with sufficient incentives (typically, cases of acts) and cases in which there is a serious problem of dilution of liability (typically, cases of omissions). The exceptions to the rule exempting from responsibility for omissions are also explained in terms of efficiency. The imposition of liability for omissions depends on the ability to identify a salient agent, i.e., to single out one or few legally responsible agents and differentiate their role from that of others. Tort law designs three types of "salience rules." It either creates salience directly (by attributing liability to a single agent), or it can exploit salience created "naturally," or it can induce injurers to create salience voluntarily.

Keywords: torts, tort law, omissions, multiple injurers, liability, alternative care, negligence

JEL Classification: K13, K42, K00