Florida State University College of Law
This Article addresses corporate law's default rules, which allow corporations to waive their directors' liability for damages based on a breach of their fiduciary duty of care. Most large publicly held corporations have adopted such a waiver in their articles of association. This Article suggests that courts should limit the range of the waivers to the circumstances that existed when the voters voted and to the information they received before they voted. This Article distinguishes between public contracts (legislation) and private contracts (commercial transactions) and the default rules that apply to each. The Article shows that courts view corporations and corporate articles as public contracts, but unlike default rules applicable to some public contracts, courts do not limit the scope of the waivers to the information that the voting shareholders received before they voted for the waivers. This Article suggests that courts should.
What Default Rules Teach Us about Corporations; What Understanding Corporations Teaches Us about Default Rules
Florida State University Law Review
Available at: https://scholarship.law.bu.edu/faculty_scholarship/3057
Working Paper version