Duty in Tort Law: An Economic Approach

Theories of tort law have focused on the breach and causation components of negligence, saying little if anything about duty. This paper provides a positive economic theory of duty doctrine. The theory that best explains duty doctrines in tort law is the same as the theory that explains strict liability doctrine. The core function of both sets of doctrines is to regulate the frequency or scale of activities that have substantial external effects. Strict liability aims to suppress or tax activities that carry unusually large external costs. Duty doctrines, especially those relieving actors of a duty of care, serve several functions, but one important class encourages or subsidizes activities that carry substantial external benefits. Another class of duty-relieving doctrines serves as complements to property rules. Still another class of duty-relieving doctrines serves to permit markets to function without distortions created by liability.