The Positive Economic Theory of Tort Law is the product of two great academics, Richard Posner and William Landes. Posner is a judge, while Landes is an economist. The Theory simply asserts that the optimal approach to view tort law is to assume that legislators enacted it to facilitate the efficient use and distribution of limited resources. A foundational economic notion that has been applied to tort law. The tort law system may become much more efficient and resilient by integrating economic principles of optimum precautions to liability standards. It will be attempted in this paper to integrate Ronald Coase's economic models into specific areas of tort law, particularly liability rules such as Negligence, Strict Liability, and Fault Liability, and it will also discuss the advantages of using economic models to better understand legal principles in Tort. However, prior to doing that, the study will seek to grasp the Economic Theory of Tort Law — How it evolved and the underlying assumptions behind the theories.
The author has conducted a strictly doctrinal investigation on the subject matter. The models developed have been corroborated in the context of logic, mathematics as well as the fundamental assumptions of economics and tort law as a whole.