INTRODUCTION
Private ordering and contracting out seem to be in the midst of a golden age in American entity law. Among closely held entities, Limited Liability Companies (LLCs) have swept the space. LLC statutes and case law proclaim the central policy ‘to give the maximum effect to … freedom of contract’. Close corporation law in most states goes as far, with late twentieth-century statutory authorizations that permit contracts to provide almost any governance rule the parties desire. For publicly held corporations, the exculpation for director statutes enacted after Smith v Van Gorkom have been broadened to permit governing provisions that exculpate officers as well. Other recent statutes provide authorization for contracting to relax rules on taking a corporate opportunity and to waive appraisal. A third recent growth area for contracting around traditional rules has appeared in the space for startup entities, where firms, often funded by venture capital, have pushed the envelope for contracting to change rules about voting and control when the firms are private but carry these contracted rules forward in a way that further rearranges the publicly held space. Does this mean the end of mandatory law or the end of the law’s limits on contracting out? Not exactly …
Robert B Thompson, Private Ordering and Contracting Out in Twenty-First-Century Corporate Law, 74 Case Western Reserve Law Review 13 (2023).
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