|Myths and legends of the market|
The JC’s guide to the foundational mythology of the markets.™
/kɑːdəʊzəʊ ɪndɪˈtəːmɪnəsi (n.)
Liability, if awarded — and therefore, generally not awarded —that would be in “an indeterminate amount for an indeterminate time to an indeterminate class” of claimants. Named for US Supreme Court Justice Benjamin N. ~, progenitor of that phrase in Ultramares v Touche.
The great American jurist Benjamin N. Cardozo held that a creditor’s claim in negligence against a debtor’s incontestably negligent auditors failed because the auditors did not owe the company’s creditors a duty of care, there being no sufficiently proximate relationship between them. Articulating a now somewhat outdated shareholder capitalism, Cardozo J held the auditors to owe only the shareholders a duty of care.
Said Cardozo J, in an immortal passage that gave rise to the metajuridical concept of “Cardozo indeterminacy”:
“If liability for negligence exists, a thoughtless slip or blunder, the failure to detect a theft or forgery beneath the cover of deceptive entries, may expose accountants to a liability in an indeterminate amount for an indeterminate time to an indeterminate class. The hazards of a business conducted on these terms are so extreme as to enkindle doubt whether a flaw may not exist in the implication of a duty that exposes to these consequences.”
Ultramares v Touche is one of those rare case that leapt the Atlantic ditch between competing common law systems, having been cited no fewer that 66 times in recent English case law including in no less a fount of authority and lexical wisdom than Hedley Byrne v Heller.