Law Commons^™

The Mandatory/Enabling Balance In Corporate Law: An Essay On The Judicial Role, John C. Coffee Jr.

Faculty Scholarship

A half-filled glass of water can be described as either half full or half empty. The structure of American corporate law – partly enabling, partly mandatory in character – can be viewed in much the same way. Some commentators see American corporate law as primarily composed of mandatory rules that the shareholders themselves cannot waive or modify, In their view, this mandatory component compensates both for the absence of true bargaining among the parties and for the inevitable divergence of interests between the principals (the shareholders) and their agents (the managers and directors). Conversely, other commentators, to whom this Article …