Chapter

Corporate Law as Public Law

in The Failure of Corporate Law

Published by University of Chicago Press

Published in print February 2007 | ISBN: 9780226306933
Published online March 2013 | e-ISBN: 9780226306988 | DOI: http://dx.doi.org/10.7208/chicago/9780226306988.003.0003
Corporate Law as Public Law

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Currently, most law students learn that a corporation is best conceptualized as a “nexus of contracts.” Corporate law, in turn, is seen as “private” law, which narrowly focuses on the rights and responsibilities contained within the “contract” between management and shareholders. This chapter argues that corporate law theorists who try to shield corporate law from the concerns of the public make the same mistake that the famous—and famously wrong—1905 Supreme Court case of Lochner v. New York made in constitutional law. The Lochner Court's mistake was the assumption that the common law and the laissez-faire marketplace are prepolitical, neutral, and insulated from government regulation. The New Deal changed those assumptions by recognizing that the market was a creature of government and that even so-called private market relationships can be the proper subject of government regulation. The chapter suggests that the Court's 100-year-old mistakes in Lochner are still being made in corporate law today and that corporate law should be considered public law.

Keywords: corporate law; contracts; Supreme Court; Lochner; constitutional law; New Deal; common law; government regulation; public law

Chapter.  4472 words. 

Subjects: Company and Commercial Law

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