ON THE LINKAGE BETWEEN THE FUNDAMENTAL PROBLEM IN CORPORATE LAW AND STANDARD CONTRACTS LAW

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Abstract

The claim argued in this paper is that common law, as presently applied to public corporations (i.e., Corporate Law and Securities Law), is characterized by a broad consumer outlook that subsumes standard contracts law. The “consumerist” attributes of shareholders in public corporations rely on the widely accepted theoretical analysis of corporate law that focuses on the separation of ownership and control (the “agency problem”), which was developed in the wake of the growing might of mega-corporations. Respectively, standard contracts law, including its consumerist elements, designed to deal with contractual failures arising from the nature of the bylaws of a public corporation, as a contract whose contents are not negotiable by the parties invited to adhere to it, and from the inferior economic and informational standing of share buyers in the capital market. As such, standard contracts law serves as an additional, justified and consistent legal tool for contending with the agency problem, whence the opening for its application to public corporations.

Keywords: Corporate Law, Public Corporations, Agency Problem, Common Law

How to cite this paper: Bukspan, E. (2004). On the linkage between the fundamental problem in corporate law and standard contracts law. Corporate Ownership & Control, 1(4), 30-35. https://doi.org/10.22495/cocv1i4p2