The evolution of common law: revisiting Posner, Hayek & the economic analysis of Law

Ojo, Marianne (2014): The evolution of common law: revisiting Posner, Hayek & the economic analysis of Law.

Abstract

This paper is aimed at highlighting how common law has evolved over the centuries, namely through the flexibility accorded to judicial precedents, as well as through the evolutionary nature evidenced in the processes and rules applied in statutory interpretation. In addition to illustrating how informational asymmetries can be mitigated through decentralisation, the paper also illustrates how a particular case, Pepper v Hart has revolutionised the scope and permissibility of aids to statutory interpretation. Whilst the decision in the case has been criticised as having facilitated a transfer of powers from the executive and legislature, to the judiciary, it is also evident that any form of aid to statutory interpretation - which would greatly assist judges in arriving at reasonable outcomes - in terms of legitimate expectations and efficient allocation of economic resources, should be permitted in judicial proceedings.

Whilst financial markets and changes in the environment impact legislators, and whilst it is widely accepted that legislation constitutes the supreme form of law, the necessity for judges to introduce a certain level of flexibility will also contribute towards ensuring that legitimate expectations of involved parties are achieved - particularly where the construction of the words within a statute gives rise to considerable ambiguity.

• Item Type: MPRA Paper
• Language: English
• Keywords: legitimate expectations; certainty; flexibility; judicial precedents; statutory interpretation; allocative efficiency, Pepper v Hart; Posner; Hayek; common law
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles; G - Financial Economics > G1 - General Financial Markets; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; K - Law and Economics > K2 - Regulation and Business Law

References

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Hayek, FA “The Use of Knowledge in Society” The American Economic Review, Vol. 35, No. 4. (Sep., 1945), pp. 519-530 http://www.jstor.org/discover/10.2307/1809376?uid=3739920&uid=2&uid=4&uid=3739256&sid=21104299293711

Jha K, “Examining the Current Importance of Pepper v Hart” November 2012 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2149694

Pepper v Hart [1992] 3 WLR 1032, [1993] 1 All ER 42, HL (E)

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