liability rule definition
liability rule means that another entity can divest the owner of the entitlement if it pays compensation determined by itself, not the owner. Calabresi and Melamed were thinking of forced divestment by courts and administrative agencies—for example, the power of eminent domain. See Guido Calabresi & A Douglas Melamed, “Property Rules Liability Rules, and Inalienability: One View of the Cathedral” (1972) 85:6 Harv L Rev 1089 [Calabresi & Melamed, “Property Rules, Liability Rules”].