The Economics of Enmity

54 Pages Posted: 5 Jun 2002  

Ward Farnsworth

University of Texas at Austin - School of Law

Abstract

This Article considers whether courts should regard enmity between litigants as a transaction cost and thus as an argument for awarding damages where a property right would otherwise be available as a remedy. It begins by examining the phenomenon of enmity generally, and concludes that enmities can be both ethically justified and instrumentally useful depending on their origins and how they are expressed. The Article surveys the treatment of enmity in various legal contexts and finds it broadly consistent with that view: the law tends to punish enmity when it motivates out-of-pocket expenditures to make someone else worse off, but generally not when it motivates the absorption of opportunity costs for that purpose; and enmity is not punished at all when it motivates socially beneficial behavior.

Turning to the specific problem of remedies after litigation, the Article argues that it is very difficult for courts to distinguish in practice between "good" and "bad" enmities. The hard question thus is how enmity should be handled when the extent of its reasonableness is unknown and when it may result in a foregone transaction that otherwise would have made both parties better off. The Article argues that courts ordinarily should pay no attention to enmity when fashioning remedies. Enmity is a complicated type of commodification preference - a preference about whether and in what circumstances to sell an entitlement; it is difficult for the law to measure accurately or regulate fruitfully, and on balance is best handled with a liberal strategy that allows parties to give effect to such preferences without collective second-guessing. Exceptions to the rule may be warranted in cases where particular enmities readily can be identified as offensive to public policy or where they will create significant costs for courts or innocent third parties. The Article concludes by defending these views against the claim that enmity is a variety of emotion and that this justifies awarding damages rather than property rights in cases where it is likely to be pervasive.

Keywords: enmity, transaction costs, socially beneficial behavior, commodification preference, public policy, costs for courts, costs for innocent third parties, enmity as a variety of emotion, awarding of damages, enmity between litigants

JEL Classification: K00, K13, K19

Suggested Citation

Farnsworth, Ward, The Economics of Enmity. University of Chicago Law Review, Vol. 69, No. 211, 2002. Available at SSRN: https://ssrn.com/abstract=314561 or http://dx.doi.org/10.2139/ssrn.314561

Ward Farnsworth (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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