The BCE Decision: Reflections on the Firm as a Contractual Organization
28 Pages Posted: 16 Jul 2008 Last revised: 29 Oct 2014
Date Written: July 14, 2008
The authors discuss the decision of the Supreme Court of Canada to approve a plan of arrangement privatizing BCE Inc. over the objections of bondholders. Summarizing the arguments for "shareholder primacy" and debenture covenants delimiting contractual rights against boards and management, they argue that an expanded conception of relational contract theory is useful in analyzing the competing claims in the BCE deal and litigation. This approach requires that broader contextual factors are necessary to consider in the functioning of the corporation, especially by after-the-fact decision-makers.
Keywords: Corporate theory, takeovers, shareholder primacy, contracts, nexus-of-contracts, stakeholder theory of the corporation, relational contract theory, transnational law, legal pluralism
JEL Classification: K20, K22
Suggested Citation: Suggested Citation