Contract Governance within Corporate Governance - A Lesson from the Global Financial Crisis

FROM EXCHANGE TO COOPERATION IN EUROPEAN CONTRACT LAW, Cafaggi, Grundmann, eds., 2010

20 Pages Posted: 6 Nov 2009

See all articles by Florian Möslein

Florian Möslein

Universität Marburg (Institut für Handels- und Wirtschaftsrecht); Munich Center on Governance (MCG)

Multiple version iconThere are 2 versions of this paper

Date Written: November 4, 2009

Abstract

The 2009 Nobel prize for economics was awarded to Elinor Ostrom and Oliver Williamson for their work on economic governance. Williamson once defined governance as “an effort to implement the ‘study of good order and workable arrangements’, where good order includes both spontaneous order in the market [...] and intentional order”. Even though corporate governance has been studied quite well over the last decades, the current financial crisis revealed important weaknesses in governance mechanisms. Yet this crisis did not primarily emerge due to specific corporate structures, but rather had its roots in the instability of markets. Hence the study of good order and workable arrangements needs to take markets into account as well: contract governance is an important lesson of the present crisis. By this token, the destruction of financial values might create a legal innovation, posing new challenges not only for regulators and legal academics, but also for management practice. Contract governance provides for an important link between the corporation and its contractual environment. By virtue of this link, contract governance can contribute to avoid future crises and to make the system of market economy more stable in the long run.

Keywords: Contract Governance, Corporate Governance, Financial Crisis, Nexus of contracts

JEL Classification: G38, G34, K12, K22

Suggested Citation

Möslein, Florian, Contract Governance within Corporate Governance - A Lesson from the Global Financial Crisis (November 4, 2009). FROM EXCHANGE TO COOPERATION IN EUROPEAN CONTRACT LAW, Cafaggi, Grundmann, eds., 2010 . Available at SSRN: https://ssrn.com/abstract=1499610

Florian Möslein (Contact Author)

Universität Marburg (Institut für Handels- und Wirtschaftsrecht) ( email )

Savignyhaus
Universitätsstraße 6
Marburg, 35032
Germany

HOME PAGE: http://www.uni-marburg.de/fb01/lehrstuehle/zivilrecht/moeslein

Munich Center on Governance (MCG) ( email )

Geschwister-Scholl-Platz 1
Munich, Bavaria 80539
Germany

HOME PAGE: http://www.mcg.uni-muenchen.de

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