Professor Jeffrey Lipshaw will be participating in an online micro-symposium sponsored by the AALS Section on Agency, Partnerships, LLCs, and Unincorporated Associations, titled “Contract is King, But Can It Govern Its Realm?” The micro-symposium will take place on the Business Law Professor Blog during the week of November 16-20, 2015. Other participants will include Joan Heminway (Tennessee), Daniel Kleinberger (William Mitchell), Mohsen Manesh (Oregon), and Sandra Miller (Widener). Anne Tucker (Georgia State) will moderate.
The micro-symposium will explore the role of private ordering in LLCs and other alternative business entities, a broad topic that encompasses many interesting questions, such as:
(1) To what extent, and in what ways, does contract play a greater role in LLCs and LPs than in otherwise comparable corporations? Is it helpful to conceptualize private ordering in this context as contractual?
(2) Does unfettered private ordering reliably advance the interests of even the most sophisticated parties? Does it waste judicial resources? In their book chapter, The Siren Song of Unlimited Contractual Freedom, two distinguished Delaware jurists, Chief Justice Leo Strine and Vice Chancellor J. Travis Laster, raise these concerns and argue in favor of more standardized fiduciary default rules.
(3) Should the law impose fiduciary duties of loyalty and care as safeguards against abuse of the unobservable discretion managers enjoy because those duties reflect widely held social norms that most investors would expect to govern the conduct of managers?
(4) If the parties themselves would choose to waive their fiduciary obligations, is there nevertheless a continuing role for mandatory terms and judicial monitoring of the parties' relationship?
(5) Does it matter whether an LLC or alternative business entity is closely held or publicly traded?