Abstract

http://ssrn.com/abstract=2238287
 


 



Discretion


D. Gordon Smith


Brigham Young University - J. Reuben Clark Law School

Jordan C. Lee


Brigham Young University - J. Reuben Clark Law School

March 22, 2013

Ohio State Law Journal, Vol. 75, 2014

Abstract:     
Discretion is an important feature of all contractual relationships. In this Article, we rely on incomplete contract theory to motivate our study of discretion, with particular attention to fiduciary relationships. We make two contributions to the substantial literature on fiduciary law. First, we describe the role of fiduciary law as “boundary enforcement,” and we urge courts to honor the appropriate exercise of discretion by fiduciaries, even when the beneficiary or the judge might perceive a preferable action after the fact. Second, we answer the question, how should a court define the boundaries of fiduciary discretion? We observe that courts often define these boundaries by reference to industry customs and social norms. We also defend this as the most sensible and coherent approach to boundary enforcement.

Number of Pages in PDF File: 38

Keywords: Fiduciary Law, Duty of Loyalty, Contracts, Business Organizations, Employment

JEL Classification: K12, K22, M13

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Date posted: March 24, 2013 ; Last revised: April 10, 2013

Suggested Citation

Smith, D. Gordon and Lee, Jordan C., Discretion (March 22, 2013). Ohio State Law Journal, Vol. 75, 2014. Available at SSRN: http://ssrn.com/abstract=2238287 or http://dx.doi.org/10.2139/ssrn.2238287

Contact Information

Gordon Smith (Contact Author)
Brigham Young University - J. Reuben Clark Law School ( email )
422 JRCB
Provo, UT 84602
United States
801.422.3233 (Phone)
801.422.0390 (Fax)
Jordan C. Lee
Brigham Young University - J. Reuben Clark Law School ( email )
430 JRCB
Brigham Young University
Provo, UT 84602
United States
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