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On the efficiency of the common law: an application to the recovery of rewards

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  • Anthony Niblett

    (University of Toronto)

Abstract

Richard Posner’s influence on the field of law and economics cannot be overstated. Among his many contributions, Posner offered an early conjecture that remains fascinating and controversial to this day: the idea that common law rules are more likely than legislative codes to be concerned with efficiency. In this paper, I compare the efficiency of a common law rule of contracting to the efficiency of a civil law rule. In common law jurisdictions, claimants must have knowledge of a reward in order to recover. In civil law jurisdictions, however, no such knowledge is required. I analyze the efficiency of each rule by examining the incentives created by each rule. In a finding that agrees with Posner’s hypothesis, I argue that the common law rule is more efficient. The model has a number of applications beyond contract default laws. I use the model to discuss three legal questions previously analyzed by Richard Posner: (1) incentivizing innovation; (2) the finders-keepers rule in property law; and (3) salvage rights in maritime law.

Suggested Citation

  • Anthony Niblett, 2017. "On the efficiency of the common law: an application to the recovery of rewards," European Journal of Law and Economics, Springer, vol. 43(3), pages 393-417, June.
    • Handle: RePEc:kap:ejlwec:v:43:y:2017:i:3:d:10.1007_s10657-015-9520-1
    DOI: 10.1007/s10657-015-9520-1
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    More about this item

    Keywords

    Efficiency of the common law; Civil law; Contracts; Rewards; Unilateral contracts; Property; Innovation; Finders keepers; Salvage; Maritime law;
    All these keywords.

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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