Hand rule

"Hand rule" is a rule of adjudicating negligence in tort lawsuits, devised by Judge Learned Hand.

The rule

The hand rule can be formulated simply as follows,

$B<PL$

In the formula, B denotes the cost of necessary precautions to prevent the accident that would trigger a tort lawsuit, while P is the probability of such accident, and L is the loss from the accident. PL, then, is the expected loss. If as the formula states, the cost of precaution is smaller than expected cost, then the party must exercise that precaution and is liable of the loss if the precaution was not exercised.