THE RELEVANCE OF LAW AND ECONOMICS FOR THE DEVELOPMENT OF JUDGE MADE RULES - EXAMPLES FROM GERMAN CASE-LAW

Judge-made rules play a significant role in the development of civil l aw. In Germany large parts of accident law and of contract law are tod ay influenced by judge-made rules. Judges often refer to principles of medium range ('Prinzipien mittlerer Reichweite') when they develop ne w rules. It can be shown that these principles are often very close to economic principles, such as economic efficiency. The paper describes the relationship between the legal principles and the economic princi ples. It also explains how economic arguments can be introduced into l egal reasoning, In this respect the concept of negligence is used as a n example: interpretation of this concept is necessary before it can b e used for a solution of hard cases. The paper presents some cases sho wing that the interpretation of negligence in judge made law comes ver y close to economic principles. The same applies for precontractual di sclosure rules which generate incentives to produce useful information .