Judex Oeconomicus - 12 Decisions of the German Supreme Court, Commented from a Law and Economic Perspective

Abstract

We discuss twelve important decisions of the German Supreme Court from an economic perspective. The German literature often maintains that the production of legal norms is restricted and that courts cannot use economic arguments and cannot even be criticized from an economic perspective. It is claimed that judges do not have the required economic knowledge. Moreover it is not guaranteed that during the legal proceedings parties generate all the information which might lead to a correct assessment of economic consequences. Even though this critique is not fully unjustified, we hope to be able to show the reader that economic argument can be successfully used in hard cases. We discuss the concept of negligence and strict liability. In the context of strict liability we show that the legal concept of causation sometimes becomes meaningless and that a reasonable solution of a case is dependent on completely different considerations. We also discuss some cases of pure economic loss in tort which show that the German solution to exclude such cases from compensation is overly restrictive. Other topics deal with an economic interpretation of bad faith and good faith.

Keywords: economic perspective of legal decisions, German Supreme Court, negligence, strict liabilty

JEL Classification: K1