Economics of Liability An Islamic View by Monzer Kahf

Top 20 FREQUENT WORDS

liability 160 compensation 76 injurer 54 islamic 48 injuries 46 injury 45 amount 34 injured 34 producer 31 economics 30 loss 29 camels 27 economic 25 safety 24 journal 23 uncertainty 23

consumer 22 female 22 insurance 22

DOCUMENT KEY POINTS

• the american system of liability gives the courts a wide range of authority to assess the injury which includes material emotional and loss of future income opportunity and compensation that aims at not only granting the injured a recuperating sum but also at deterring the injurer from such a behavior
• jel classification g k p keywords civil liability tort islamic tort and islamic liability the writer was formerly a research economist at the islamic research and training institute irti of the islamic development bank idb

• the difficulty in prediction on the part of producers of goods and services is a landmark of the failure of the a system in achieving the objective of internalizing liability risks as it ends up eliminating certain goods and services from the market preventing new goods from entering it and reducing spending on research and development related to new goods viscousi and priest

• the evolution of the negligence rule in the practical application of courts toward securing compensation to the injured by charging the stronger party which has always been considered to be the producer of commodities and or services iii the inclination of courts to give less attention to the motives of the injurer and iv the increasing adoption of the contribution of the commodity defect to the injury rather than being its sole cause priest

• the ambiguous effect of liability on consumer behavior it may not be difficult to estimate the compensation of pecuniary harm as one may theoretically estimate the effect of the injury on the marginal utility of money of the consumer
• consequently it is difficult to argue that a third party insurance is more efficient than first party insurance since the latter gives consumers the right to select what risks they would like to insure and to evaluate expected cost of injury against the cost of insurance

• the contributory negligence defense implies that if the consumer fails to take sufficient care in avoiding the injury the producer s liability goes to zero if he or she forwarded sufficient design care instructions and information about the risks of the commodity schwartz

• whether this equivalent should be calculated on the basis of prices of camels in our days and if so in what country should it be in the same area where the prophet had lived ie makkah and mad Ynah or is some other area or should an equation be derived on the basis of say the cost of living equivalent of female camels at the time of the prophet or the labor wage equivalent of the same quantity of camels at that era settlement of these questions is still awaited for

• exceptions to this rule are five cases determined in the law as follows i when the direct action is founded on the cause ii when the indirect injurer misleads or forces the direct injurer iii when there is an ill intention on the part of the indirect injurer but not on the part of the direct injurer iv when the indirect action is the most effective in creating the injury and v when it is impossible to make the direct injurer liable for the injury pauft law

• creating a social insurance system for payment of compensation recognizing that the injurer did not intend to make the harm and that the amount of compensation may be beyond the injurer s means and ability to pay the islamic liability system has created a certain form of insurance that assures the payment of the compensation to the injured
• it redefines this kind of social solidarity and restricts it to financial support only in the case of payment of wergild in liability cases ie it excludes financial liability resulting from a criminal act as well as nonfinancial liability such as taking human ranso miss many jurists also include in al caqilah neighbors and professional associates and colleagues of the injurer

• economics of liability under the islamic system in this section we will study the effect of the i liability system on a producer s predictability b the objective of compensation c the objective of deterrence d the role of the government with regard to liability e the economic and social effects of kaff rah and f producer and consumer equilibria under the i system of liability
• if this amount is also beyond the means of the injurer the qur nic verse referred to above provides for a substitute of two consecutive months of fasting on the part of the injurer as a spiritual rehabilitation for the purpose of making him or her more cautious and careful in the future fayeull h

• moreover camels for the arabs of the prophet s era where almost the sole capital item a they were a standard measure of wealth source of food and clothing source of residence for the nomads and the only means of transportation in the arabian desert kahf
• this may imply that giving one hundred female camels in that society was tantamount to making the injured or his or her family very rich and to provide them with sufficient capital to place them at the top of the scale in terms of economic status in the society

• two means are used in the i system for the objective of inducing the consumer to avoid injury and reducing moral hazards i the exclusion of certain injuries from compensation ii the distinction between liabilities of direct injurer and indirect injurer along with the difficulty of proving negligence in the case of indirect injurer
• other tools consist of fines imposed by the authority and or judiciary in the form of tax on injurers zuhayl Y and regulatory instructions by the control authority of industries and commodities that may involve risks to users and consumers

• the number of people exposed to potential injuries is also important in determining the required level of safety measures ie extra safety measures are required for in the case of walking while holding dangerous materials in a crowded market than in empty areas
• one s action within one s own property or exercise of one s own legitimate right relieves one from any liability except in the case of abuse of one s own right such as doing the action only for hurting other people khafif vol

• in addition to the general islamic guidance which is derived from the basic role of the government in islam as defined in the islamic political system the practice of cumar the second successor of the prophet may be quoted when he specifically considered the islamic government responsible for the well being of the future generations
• digression compensating the injured in crimes the state responsibility as a final resort for compensating the injured in liability is very close to its responsibility in compensating the injured in criminal actions

• would we be better off if we were to leave the basic functions of compensation and deterrence of such a system to courts and judges or if life has to go on anyway would we be better off if we were to have a system that allows both non cheating consumers and non negligent producers to predict the outcome of possible injuries and life loss this paper studied the tenets of the islamic civil liability system and analyzed its economics

• liability also has several indirect cost elements which include the effect of the incidents and the court judgments on the reputation of the producers of goods and services which is reflected on future demand for the product the effect of the incidence on the future cost of insurance its effect on the prices of the corporation s shares in the stock market and on the producer s future ability to borrow the effect of the incidence of future cost of new regulations imposed by the control authority on the whole industry as well as on the injurer and the tax payer s cost of supervising such expanded regulations future administrative fines etc
• hand wounds if it reaches the bone female camels if it breaks the bone female camels if it displaces the bone female camels

• ibn khald n circa defines the role of the islamic government as managing the affairs of people in accordance with implications of islamic rationale in procuring their hereafter s interests and worldly interests related to the former
• this kind of injury is considered subject to compensation only to the extent that it entails an actual financial loss or a material harm that is inflicted on the injured keeping in mind that pain and suffering are considered a form of material harm zarq

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DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic economics

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DOCUMENT REFERENCES

Number of Pages

23

Published Date

2005-04-28 10:12:27

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