Contractarianism and Corporate Law: Alternative Explanations to the Law's Mandatory and Enabling/Default Contents

Authors

• Ige Omotayo Bolodeoku, University of Lagos

Abstract

The article critically examines the contractarian theory of corporate law, which posits that corporate governance should primarily consist of default rules that parties can modify through private bargaining. While this approach offers valuable economic insights, the article argues that its limitations as both a descriptive and prescriptive framework undermine its effectiveness in addressing the complexities of corporate governance, particularly in widely held companies. The analysis highlights the tension between the efficiency of default rules and the need for mandatory legal protections to prevent managerial abuse and protect public interests. Ultimately, the article advocates for a balanced approach that incorporates both contractarian flexibility and necessary legislative oversight.

Disciplines

Law | Law and Economics

Recommended Citation

Ige O. Bolodeoku, Contractarianism and Corporate Law: Alternative Explanations to the Law's Mandatory and Enabling/Default Contents, 13 Cardozo J. Int'l & Comp. L. 433 (2005).
Available at: https://larc.cardozo.yu.edu/cjicl/vol13/iss2/3