Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Business Management Expert

An accident has occurred, causing $10,000 in harm to the victim. The amount of harm done is undisputed and easy to prove; punitive damages are not applicable, so any damage award would be for exactly $10,000.
This type of accident is governed by strict liability, so the injurer is legally responsible, but it may be difficult to prove in court that he caused the harm. The victim can hire a lawyer for $3,000 and go to trial, in which case he would have a 40% chance of winning. He could also hire an expert witness to testify. This would ensure victory at trial, but would cost an additional $10,000, for a total of $13,000. Going to trial costs the defendant (injurer) $5,000, regardless of whether the plaintiff (victim) hires an expert witness. Assume that neither party pays any legal expenses if an out-of-court settlement is reached.
First, consider the usual American rule where each party pays its own legal fees.
If the case goes to trial, will the plaintiff hire an expert witness or not?
Given your answer to (a), calculate
each party's threat point during pre-trial negotiations (which is its noncooperative payoff if the case goes to trial)
the gains from cooperation if a pre-trial settlement is reached
the settlement that would occur if the two parties agreed to divide the gains from cooperation evenly
In this scenario, would the American rule lead to over-, under-, or efficient precaution on the part of the injurer?
Next, consider the usual British rule where the losing party pays both sides' legal fees (including the cost of the expert witness, if he was hired).
If the case goes to trial, will the plaintiff hire an expert witness?
Given your answer to (d), answer the same three questions as before: calculate
each party's threat point
the gains from cooperation
the settlement that would occur if gains from cooperation were divided evenly
In this scenario, would the British rule lead to over-, under-, or efficient precaution on the part of the injurer?
Finally, consider the following cost-shifting rule, similar in spirit to Federal Rule 68. If the case goes to trial and no damages are awarded, each side pays its own expenses. If damages are awarded and are lower than a settlement offer the plaintiff (victim) refused, the plaintiff pays both sides' expenses. If damages are higher than a settlement offer the defendant (injurer) refused, the defendant pays both sides' expenses.
What will happen if the case goes to trial after the defendant offers to settle for $10,001? Is the plaintiff better off accepting this offer or going to trial?
What will happen if the case goes to trial after the plaintiff offers to settle for $9,999? Is the defendant better off accepting this offer or going to trial?
What do you expect to happen in pre-trial negotiations?
In this scenario, would this cost-shifting rule lead to over-, under-, or efficient precaution on the part of the injurer?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M92102224
  • Price:- $25

Priced at Now at $25, Verified Solution

Have any Question?


Related Questions in Business Management

What are the benefits for organizations considering

What are the benefits for organizations considering integrating positive social change into their business strategy? What are the potential risks for organizations considering integrating business strategies with an emph ...

There are many examples in which an employee can be

"There are many examples in which an employee can be committed to an organization yet not feel job satisfaction or lack involvement. One such example could be the overqualified employee. According to Katzell and Yankelov ...

What evidence suggests that cotton plantations in the us

What evidence suggests that cotton plantations in the US South before the Civil War had economies of scale?

Digistar inc is a large corporation that produces a wide

Digistar, Inc., is a large corporation that produces a wide variety of products and services. As a result, it is a tall organization with a product structure. Employees are only expected to report to a single boss. Even ...

Discuss the link between strategy and performance select an

Discuss the link between strategy and performance. Select an industry and discuss 2 rival firms in that industry and how they illustrate the difference between strategy and performance.

What is the difference between a greenfield investment and

What is the difference between a greenfield investment and an acquisition? Which form of investment is a firm more likely to choose?

Mcnealy entered into a contract with wagner to pay 250000

McNealy entered into a contract with Wagner to pay $250,000 as a lump sum for all timber present in a given area that Wagner would remove for McNealy. The contract estimated that the volume in the area would be 790,000 b ...

What were the most important sources of economic growth

What were the most important sources of economic growth before the Civil War?

213 variablesassignments driving costschallengeactivity2131

2.13 Variables/Assignments: Driving costs challenge activity 2.13.1: Driving costs. Reset Driving is expensive. The assignment is to have a program with a car's miles/gallon and gas dollars/gallon (both floats) as input, ...

One of the most important contributions of hofstedes

One of the most important contributions of Hofstede's studies regarding working in diverse teams is the idea of "diversity distance". How would this idea be useful in creating trust in a virtual global team?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As