Document Type

Article

Publication Date

2011

Keywords

damages, securities, market value losses, compensation

Abstract

The BP Deepwater Horizon spill and the Toyota car recalls have highlighted an important legal anomaly that has been overlooked by scholars — judicial inconsistency and confusion in ruling whether to compensate for the loss in market value of wrongfully affected property. This article seeks to understand the anomaly and, in the process, to build a stronger foundation for enabling courts to decide when — and in what amounts — to award damages for market value losses. To that end, the Article analyzes the normative rationales for generally awarding damages, adapting those rationales to derive a theory of damages that covers market value losses, not only of financial securities (such as stocks and bonds) but also ordinary products (such as automobiles and lightbulbs).