159 F.2d 169 (2d Cir. 1947).

Rule: In cases where a standard already exists for reasonable care, the jury will ordinarily use that standard as the basis for evaluating the reasonableness of the defendant’s conduct.  Where no such standard exists, however, the defendant’s conduct can be compared to the standard of reasonable care as measured by the following: the probability that an injury will occur; the magnitude of such an injury; and the burden of preventing the injury.  Where the burden of safety precaution is less than the probability of harm in light of the magnitude of the harm, a reasonable person would employ the safety precaution.

Summary:  The defendant barge owner was alleged to be negligent for failing to maintain a presence on board.  Judge Learned Hand ruled that the owner’s duty was a function of the probability that some accident might occur, the seriousness of the potential injury, and the burden of taking adequate precautions to avoid the injury.  Judge Hand further articulated the famous “Hand formula” for making this calculation: “if the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P; i.e., whether B less than PL.

In other words, according to Judge Hand, in a negligence case, the judge or jury should attempt to measure three things: the magnitude of the loss if an accident occurs (L), the probability of an accident occurring (p), and the economic burden of taking precautions to prevent the accident (B). If B is less than P times L, then the failure to take those precautions is negligence.  By corollary, “if the cost of safety measures or curtailment—whichever cost is lower—exceeds the benefit in accident avoidance to be gained by incurring that cost, society would be better off, in economic terms, to forgo accident prevention.”

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