There exists a disconnect in corporate law between the outsized role officers play in managing the corporation and the scant attention these actors receive in statutes and case law. Out of the doctrinal void, a proposal by the ABA’s Officer Liability Task Force has emerged. Seizing on the private ordering movement in corporate law, the Task Force proposes contractual means for addressing the uncertainty surrounding the duties of officers. The Task Force’s proposal extends private ordering in a radical new direction, taking aim at bedrock principles of corporate law – fiduciary duties and the business judgment rule.
This article takes a deep dive into the issue of private ordering corporate officer fiduciary obligations and liability. Specifically, this article addresses questions like: Should officer duties be a product of contract or common law? What is the foundational basis for officer fiduciary obligations? What are the bounds, if any, for private ordering of this nature? How does officer private ordering fit within the broader scheme of privately ordered fiduciaries across business organizations? What are some of the possible ways of structuring fiduciary duties and the business judgment rule via contract? The goal of this article is twofold. First, to provide guidance regarding the viability and drafting considerations for corporate actors considering contractually structuring officer duties. Second, to engage in a discussion of the broader normative implications for corporate law if officer fiduciary duties and liabilities become dominated by private ordering.
Shaner, Megan, Privately Ordered Fiduciaries (December 19, 2020). George Mason Law Review, volume 28, no 1, 2020.