Liability

The topic of liability is vast; it includes damages to person, property, and reputation. The range of issues that arise in a given case include, at the least, the identification of some culpable conduct by the defendant, some causal connection between that conduct and the harm to the injured person, and some account of whether, and if so how, the injured party contributed to his own loss or assumed the risk of that injury.

Structuring a sound set of liability rules is of profound importance for anyone who believes in both the importance of individual liberty and the need to provide redress for, or a deterrence of, force and fraud practiced by other individuals. Several traditional distinctions, imperfectly realized at common law, are critical for the implementation of this scheme. The first of these distinctions is the line between harms that occur between strangers and those harms that occur among individuals who stand in some special relationship with each other (e.g., physician–patient, host–guest, employer–employee). The key point here is that, in the former cases, the libertarian desire to protect both person and property tends to lead toward the adoption of strict rules of liability that afford the defendant little breathing room when his actions injure other parties. In its classical formulation, the principle of strict liability says that, once the defendant strikes the plaintiff or creates a trap that causes him injury, he can be held liable even if the defendant had no intention to cause harm and had exercised all due care in order to avoid the harm in question. This rule still allows for defenses vital to a libertarian framework. It permits the owner of land to escape liability for harm to trespassing plaintiffs, except, sensibly, if his conduct is willful and wanton. It also allows for defenses based on the plaintiff’s misconduct to either eliminate liability (which was the earlier preference) or to divide it in accordance with fault, which is the dominant view today.

Many jurisdictions do not afford this high level of protection, particularly in cases of personal injury, holding actors responsible for accidental harms only if they have failed to exercise reasonable care. The differences between the strict liability and liability based on negligence are not that critical to the libertarian program because even if they have profound consequences in a few cases, the vast majority of actions between strangers entail some negligence in leading up to the accident, so that the level of legal protection turns out to be quite high in both systems. In highway accidents, for example, a party is virtually always negligent whenever he or she violates the rule of the road, except perhaps in cases of sudden heart attacks or epileptic fits—hardly major sources of concern.

The key libertarian concern stems from the reluctance to impose any duty of rescue for strangers whom a person has not injured. Although there are strong moral reasons to assist those in need, the libertarian view, which retains much vitality in modern case law, is that the concern with individual autonomy precludes any legal obligation to behave as a Good Samaritan. The fears here are multiple; they include the risk that one person will simply be able to commandeer the ability or resources of another, that omissions will be found everywhere, and that, for example, a crowd of people on the beach could all be held liable if no one of them rescues.

Liability is much more complicated in those cases where the parties have entered into some kind of consensual arrangement. In those cases where the agreement is explicit about the allocation of risk between the parties, that contract should be respected to the same extent as any other agreement. This view is in contrast to the modern one, which, either by legislation or judicial decision, overrides clear clauses that limit or exclude liability for personal injury or property damages on supposed grounds of public policy or of supposed inequality of bargaining power. This approach should be regarded as a direct effort to impose judicial regulation on private contracting authority.

Most libertarians would condemn this view simply because it undermines the scope of individual choice. But the harmful systematic consequences of this approach should be noted as well. Any decision to allow unlimited damages works to the benefit of an injured party in an individual case, but in the long term no supplier of goods or services will remain in business if he or she knows that the potential liability, whether or not insured, exceeds its anticipated revenue. Reductions in medical service and product innovation often originate in well-​intended but misguided efforts to protect consumers, patients, tenants, and employees from their opposite number. This constant effort to design a legal regime in which tort dominates contract is perhaps the single most important development of the modern law, where most of the litigation explosion arises in these consensual cases and not in the random interactions among strangers. The central task of liability reform is to secure an inversion where contract once again dominates tort.

Further Readings

Coleman, Jules L. Markets, Morals, and the Law. Cambridge: Cambridge University Press, 1988.

Epstein, Richard A. Simple Rules for a Complex World. Cambridge, MA: Harvard University Press, 1998.

———. A Theory of Strict Liability. San Francisco: Cato Institute, 1980.