Calculus of negligence
|Part of the common law series|
|Liability and remedies|
|Duty to visitors|
|Other common law areas|
In the United States, the calculus of negligence, or Hand rule or Hand formula, is a term coined by Judge Learned Hand and describes a process for determining whether a legal duty of care has been breached (see negligence). The original description of the calculus was in U.S. v. Carroll Towing, in which an improperly secured barge had drifted away from a pier and caused damage to several other boats.
Articulation of the rule 
[T]he owner's duty, as in other similar situations, to provide against resulting injuries is a function of three variables: (1) The probability that she will break away; (2) the gravity of the resulting injury, if she does; (3) the burden of adequate precautions.
This relationship has been formalized by the law and economics school as such: an act is in breach of the duty of care if:
where B is the cost (burden) of taking precautions, and P is the probability of loss (L). L is the gravity of loss. The product of P x L must be a greater amount than B to create a duty of due care for the defendant.
The calculus of negligence is based on the Coase theorem. The tort system acts as if, before the injury or damage, a contract had been made between the parties under the assumption that a rational, cost-minimizing individual will not spend money on taking precautions if those precautions are more expensive than the costs of the harm that they prevent. In other words, rather than spending money on safety, the individual will simply allow harm to occur and pay for the costs of that harm, because that will be more cost-efficient than taking precautions. This represents cases where B is greater than PL.
If the harm could be avoided for less than the cost of the harm (B is less than PL), then the individual should take the precautions, rather than allowing the harm to occur. If precautions were not taken, we find that a legal duty of care has been breached, and we impose liability on the individual to pay for the harm.
This approach, in theory, leads to an optimal allocation of resources; where harm can be cheaply avoided, the legal system requires precautions. Where precautions are prohibitively expensive, it does not. In marginal-cost terms, we require individuals to invest one unit of precautions up until the point that those precautions prevent exactly one unit of harm, and no less.
Critics point out that term "gravity of loss (L)" is vague, and could entail a wide variety of damages, from a scratched fender to several dead victims. Even then, on top of that, how exactly a juror should determine a value for such a loss is abstract in itself. The speculative nature of the rule also seizes upon how a juror should determine the probability of loss (P).
Additionally, the rule fails to account for possible alternatives, whether it be the use of alternate methods to reach the same outcome, or abandoning the risky activity altogether.
Use in practice 
In the U.S., juries, with guidance from the court, decide what particular acts or omissions constitute negligence, so a reference to the standard of ordinary care removes the need to discuss this moot "rule". Juries are not told this "rule" but essentially use their common sense to decide what an ordinarily careful person would have done under the circumstances. The "calculus of negligence" has less practical value for the lay researcher seeking to understand how the courts actually determine negligence cases in the United States than the jury instructions used by the courts in the individual states.
In Australia, State and Territory legislatures require that the social utility of the activity that creates the risk of harm be taken into account in determining whether or not a reasonable person would have taken precautions against that risk of harm. For example, in Haris v Bulldogs Rugby League Club Limited  the court considered the social utility of holding football matches when determining whether a football club took sufficient precautions to protect spectators from the risk of being struck by fireworks set off as part of the entertainment during a game.