Question

1. Assume the following happened:

• One of the stop signs at the intersection of two Coquitlam roads is knocked over on Saturday evening;

• The city Roads & Transportation Service (responsible for “signs down, missing or vandalized”) gets a call to their Engineering Customer Service very early on Sunday morning (so now they know the sign is down) but decides to wait until Monday morning to replace the sign, in order to save $1,250 overtime pay to its road crew;

• Sunday evening, Mr. Zhang, unaware that the sign is missing, assumes that he has the right-of-way, enters the intersection without slowing, and collides with Mr. Samnani’s car;
• The two cars and their occupants suffer damages which total $10,000 ($4,000 to Mr. Zhang and $6,000 to Mr. Samnani);

• At trial, the court accepts the traffic expert testimony that the probability, per day, that such an accident will occur is 20% if there is no stop sign in place and 5% if there is a stop sign.

Will the court (they apply the Hand Rule) find the Roads & Transportation Service negligent? Show your work.

Answer 1

Hand rule or BPL formula is an instrument defined in Economics of Law to calculate calculus of negligence and determine if legal duty of care has been breached in a process due to negligence of authority. Mathematically, a breach of duty is considered to occur due to authority's negligence if:

where p = probability of occurence of loss, L = amount suffered in loss and B = cost of taking precautions by the authority.

In our case, authority in question is Roads & Transport Services department.

Stop sign had been missing since Saturday evening but authorities decided to fix it on Monday morning because of the cost of overtime pay of $1250.

Hence cost of taking precautions by authority= B = $1250.

Probability of loss without stop sign = 20%

Probability of loss with stop sign = 5%

Hence probability of loss (P) solely caused due to missing road sign = 20% - 5% (natural level) = 15%

Amount of loss suffered = $10000

So, calculating

Since PL > B, court will find Roads & Transportation Service negligent on breach of legal duty of care.