Question

In: Finance

Tiffany is in an automobile accident, and both parties are partially at fault. Tiffany is judged...

Tiffany is in an automobile accident, and both parties are partially at fault. Tiffany is judged to be 40 percent at fault and the other driver is judged to be 60 percent at fault. Tiffany’s actual damages are $60,000. Under a pure comparative negligence law, how much, if anything, does Tiffany receive for her injury? Explain why.

Solutions

Expert Solution

What is comparative negligence law?

In a traffic accident, it is often difficult to determine who is actually responsible. Here, the role of comparative negligence arises. As per comparative negligence law, the court apportion the blame and the also the responsibility between both the parties.

In pure comparitive negligence law, the party can demand compensation for the damages, but the amount of loss for which he is responsible has to be deducted.

Here, an automobile accident occurred between Tiffany and another party ( Let the name of the other party be ABC). Here, the court apportioned the blame between both the parties. Tiffany is blamed 40% and ABC is blamed 60%.

Calculation of the amount Tiffany will receive

As per the law,

The net amount received by the party will be the total amount to be recovered less the loss due the fault of the party.

That is,

Net amount = Total amount - portion of total loss due to the party

Here,

Net amount received by Tiffany

= 60,000 - (40% of 60,000 )

= 60,000 - (60,000 x 40% )

= 60,000 - 24,000

= 36,000

Alternatively,

Net amount received by Tiffany

= (100 - 40)% x 60,000

= 60% x 60,000

=36,000

(Here, The total amount is considered to be 100% )


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