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The Uncorporation and the Unraveling of 'Nexus of Contracts' Theory

17 Pages Posted: 10 Dec 2010  

Grant M. Hayden

Southern Methodist University - Dedman School of Law

Matthew T. Bodie

Saint Louis University School of Law

Date Written: December 10, 2010

Abstract

This is a review of The Rise of the Uncorporation, by Larry E. Ribstein (Oxford University Press 2010). The Rise of the Uncorporation gives a compelling account of the increasing reliance on business forms other than the corporation. These new organizational forms - such as limited liability companies, limited liability partnerships, partnerships, and the like - give businesses greater freedom to structure themselves in ways that best facilitate their particular needs. And this, according to Ribstein, is an unqualified good, for it allows firms to operate more efficiently than if they were forced to assume an intensely regulated form.

Like most stories, though, this one has a heavy, and here it is the corporation. The corporate form, which dominated the landscape for much of the twentieth century, is contrasted with the uncorporation and presented as the product of forced, not free, choice. This is, perhaps, the most surprising (and welcome) aspect of the book, for the corporation has long been theorized as a product of contractual freedom and championed for its resulting efficiency. Now that we (with Ribstein’s help) have dispensed with the myth that the corporation is merely a nexus of contracts, we can focus our attention on the significant role that government plays in all forms of organizational form, corporate and otherwise.

JEL Classification: K12, K22

Suggested Citation

Hayden, Grant M. and Bodie, Matthew T., The Uncorporation and the Unraveling of 'Nexus of Contracts' Theory (December 10, 2010). Michigan Law Review, Vol. 109, 2011; Hofstra University Legal Studies Research Paper No. 10-45; Saint Louis U. Legal Studies Research Paper No. 2010-31. Available at SSRN: https://ssrn.com/abstract=1723170

Grant M. Hayden (Contact Author)

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States

Matthew T. Bodie

Saint Louis University School of Law ( email )

100 N. Tucker Blvd.
St. Louis, MO 63101
United States

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