Final answer:
The principle of strict liability applies in the case of Z's gas connection leading to an explosion, making Z liable regardless of whether B followed instructions, due to the inherently dangerous nature of the work. Coase's theorem underlines the necessity of well-defined property rights for resolving disputes, although it relates more to negotiating externalities and responsibilities.
Step-by-step explanation:
The legal principle applicable in the case where Z, a distributor of natural gas, caused an explosion while connecting gas to B's house is known as strict liability. This principle is invoked in scenarios involving abnormally dangerous activities where, regardless of the level of care exercised, there is a high risk of harm that cannot be completely guarded against. The key aspect of strict liability is that a defendant may be held responsible for damages without a showing of negligence or fault. In the case described, the fact that B did not turn off the pilot light on her furnace as instructed did not absolve Z of liability due to the inherent risk involved in connecting gas lines.
Coase's theorem is related in that it discusses how clearly defining property rights is essential for resolving disputes and allocating responsibilities. Although Coase's theorem typically applies to the negotiation of externalities and property rights rather than strict liability, it highlights the importance of legal responsibilities in determining the actions parties take to mitigate risks.