Externalization of Agreed Costs to an Absent Third Party: How an Agreement Between Two Parties Can Place Its Costs on Someone Else

This conceptual paper introduces Externalization of Agreed Costs to an Absent Third Party, a mechanism in which an agreement passes burdens or exposure to someone outside the decision through shared work, resources, or records. Consent among the parties is then taken to settle effects on others. The paper asks who agreed, who was affected, and what authority the parties had over those affected. An external effect is not automatically unauthorized, and the account does not require every affected person’s consent. The relevant permissions, duties, and routes by which burdens reach others require separate assessment. The discussion connects the mechanism to Coase’s account of social cost and examines the 1953 transfer of the Love Canal site from the Hooker Electrochemical Company to the Niagara Falls Board of Education. Drawing on an EPA account and published court decisions, it considers the parties’ allocation of risk alongside the later exposure of residents and schoolchildren. The case illustrates effects beyond the agreement’s participants without determining liability or medical consequences. Part of the Power, Permission, and Obligation series within On Human Modeling, the paper examines the scope of claims that a matter has been agreed. Its framework can inform human–AI research on how systems interpret agreements and user permissions when proposed actions affect people outside an interaction.