Act Based Liability Essay

Act-based liability. According to this rule criminal is responsible for the expected harm regardless it actually occurs or not. Thus, if a party commits an act that will cause harm of $1,000 with probability 10 percent, he will be liable for $100 for having committed the act. 18 Discussed liability rules suggest that it is important to know the amount of harm that is imposed by wrongful act and sanctions need sometimes to be made severe or sometimes less severe in order to reach the situation when benefits for criminal do not exceed the sanction that serves as a deterrence effect.
We have mentioned that optimal probability and magnitude of sanctions constitute major elements of deterrence effect through criminal law. Risk neutral person commits a crime if gain is more than harm. Risk-averse person will be differently deterred according to different magnitude of sanction and optimal probability. For example, a risk-averse person will be more deterred by a sanction of $1,000 borne with probability 20 percent than by a sanction of $500 borne with probability 40 …show more content…
If the harm is 100$ and the probability of being deterred is 50 percent the sanction should be multiplied by 1/0.5=2, so sanction equals to 200$.21 It can be assumed that, liability rules - strict liability and fault-based liability leads to correct behavior, strict liability needs knowledge of harm, fault-based liability does not need parties to have sufficient assets in order to function well. Social advantage associated with a low probability-high sanction enforcement strategy: The low probability means that the state conserves enforcement resources, and the high magnitude of sanctions prevents dilution of desired deterrence. The optimal strategy involves maximal sanctions if parties are risk neutral, but lesser sanctions if parties are risk averse.