‘Not by Contract Alone: The Contractarian Theory of the Corporation and the Paradox of Implied Terms’

“The contractarian theory of the corporation holds that a business corporation is a creature of contract and, more specifically, a nexus of incomplete contracts between directors, shareholders, employees, suppliers, customers and other parties (see here). This draws attention to the express or implied consent of all the participants and suggests that the role of corporate law and the courts is to enable and support private ordering: corporate law supplies the transaction-cost reducing standard-form terms the parties would have agreed to had they addressed them explicitly, and courts settle disagreements by filling the contractual gaps using the same hypothetical bargain logic …” (more)

[David Gibbs-Kneller, David Gindis and Derek Whayman, Oxford Business Law Blog, 14 April]

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