Legal Definitions - ceteris paribus

Ceteris paribus is a Latin phrase that translates to "all other things being equal" or "holding all other factors constant." It is used to analyze the impact of one specific change or variable by assuming that all other relevant conditions or factors remain unchanged. This allows for a clearer understanding of a particular cause-and-effect relationship without the interference of other potential influences.

Here are some examples illustrating how ceteris paribus applies:

• In Contractual Agreements: Imagine a contract for the sale of a business that states the final purchase price will be $5 million, ceteris paribus. This means that the $5 million price is firm, provided that all other conditions specified in the contract remain unchanged. If, for instance, a major client unexpectedly terminates their contract with the business before the sale closes, or if the business's inventory significantly decreases, these would be "other things" that have changed, potentially allowing for a renegotiation of the purchase price.

• In Legal Presumptions: Consider a legal rule that presumes a child born within a marriage is the biological child of the husband, ceteris paribus. This presumption holds true unless other factors come into play, such as DNA evidence proving otherwise, or a legal declaration of paternity by another individual. The presumption simplifies legal proceedings by assuming a default truth, but it can be challenged if other facts emerge.

• In Policy Analysis: When a city council considers a new ordinance to increase the minimum wage, they might predict that it will lead to a decrease in unemployment among entry-level workers, ceteris paribus. This prediction assumes that other economic conditions, such as the overall health of the local economy, consumer spending habits, or the cost of raw materials for businesses, do not significantly change. If, simultaneously, a major employer leaves the city, that would be an "other thing" that changed, potentially affecting the actual outcome of the minimum wage increase on unemployment.