The Good Faith Thaumatrope: A Model of Rhetoric in Corporate Law Jurisprudence

84 Pages Posted: 31 Dec 2004

See all articles by Sean J. Griffith

Sean J. Griffith

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Date Written: December 2004

Abstract

This paper develops a model of rhetoric in corporate law jurisprudence. It begins by examining a recent innovation in Delaware case-law: the emerging principle of good faith. Good faith is an old notion in law generally, but it offers to bring significant change to corporate law, including realignment of the business judgment rule and a shift in the traditional balance between board authority and judicial accountability. Tracing the development of this new doctrine, the paper argues that good faith operates like a thaumatrope, oscillating between the traditional standards of care and loyalty, lowering the doctrinal hurdles of each without adding any distinct substantive content to the law. In this way, good faith functions as a rhetorical device rather than a substantive standard. That is, it operates as a speech-act, a performance, as opposed to a structured mode of analysis. Building upon political science theories and the recent work of Professor Roe and others in modeling Delaware law as a function of the twin threats of corporate migration and federal preemption, the paper argues that the judiciary employs such rhetorical devices to mitigate threats to its authority. This, then, is the rhetorical structure of corporate law. In periods of crisis and scandal, the judiciary employs rhetorical devices to reduce the pressure, typically with the effect of increasing board accountability, only to return, once the pressure recedes, to a position of board deference. The paper finds several examples of this rhetorical structure in corporate law history and argues, ultimately, that the good faith thaumatrope is merely the latest such device and is likely to follow a similar evolutionary path.

Keywords: Good faith, fiduciary duty, loyalty, care, corporate law, jurisprudence, Delaware, shareholder litigation, disney, rhetoric, authority, accountability

JEL Classification: K00, K22

Suggested Citation

Griffith, Sean J., The Good Faith Thaumatrope: A Model of Rhetoric in Corporate Law Jurisprudence (December 2004). Available at SSRN: https://ssrn.com/abstract=571121 or http://dx.doi.org/10.2139/ssrn.571121

Sean J. Griffith (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
351
Abstract Views
3,731
Rank
156,345
PlumX Metrics