Bursting Dams and the Law of Torts
Bursting Dams and the Law of Torts
Chapter 9 examines another common type of water dispute: damages inflicted by collapsing dams on downstream companies. The courts quickly adopted a standard of negligence in assessing whether the damming company was liable for damages. These rulings may be interpreted as responses to high transaction cost situations in which damming companies possess private information that downstream companies are not privy to. A second consistent pattern of holdings was that the courts applied lower standards of negligence in instances when the damming company was present first, a kind of first-possession rule as applied to dam failures. Applying the first possession rule in this way may have reflected conditions of bilateral precaution where it is less costly for downstream companies to stay away than to take precautions once present. It may also have reflected a “coming to the nuisance” situation, when it would be efficient to reduce tort liability when the damming company provided relatively large societal rents.
Keywords: dam failures, transaction costs, bilateral precaution, coming to the nuisance
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