Lenders' liability and ultra-hazardous activities

Gerard Mondello

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Abstract: The amendments made to CERCLA in 1996 reinforced the exemption of lenders that finance ultra-hazardous activities. Then, they become involved in liability only if they manage or own polluting activities. The paper compares strict liability and negligence rule in an agency model of vicarious liability type, and proposes to restore lenders as principal by applying negligence rules to them while operators would resort to a strict liability rule. This scheme leads the lender to propose to the borrower the most favorable loan level that induces the latter to provide the socially optimal security level.

Keywords: Banks; Lenders; CERCLA; TORT LAW; ASYMETRIC INFORMATION; Strict Liability; Negligence Rule; Strict liability; negligence rule; moral hazard; judgment-proof; lenders; risky activities. (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-law and nep-rmg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03502693
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Published in International Journal of Risk Assessment and Management, inPress

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03502693

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