The Decline and Rise of Fiduciary Obligations in Business

Abstract

This chapter introduces Fiduciary Obligations in Business, a volume of specially commissioned essays on fiduciary law in the business context. The scholarship on fiduciary duties in business organizations has a Janus-faced character. On the one hand, few would disagree that business organizations are one of the key contexts for the application of fiduciary duties. Yet the expressed attitude of much corporate law theory reflects increasing disdain for the role of fiduciary duties, the result of both doctrinal changes and the growth of contractarian scholarship. That marginalization of fiduciary law and theory is out of step with significant developments. In this introduction, we explain some of the ways in which the early, “pure" contractarian position on fiduciary duties has eroded. We suggest three primary critiques that have emerged over the past few decades: (1) market realism, which has brought more nuance and empirics to the contractarian position; (2) stakeholder and pluralist critiques, which emphasize business relationships beyond the shareholder-manager dyad; and (3) fiduciary traditionalism, which draws on philosophical and moral justifications for fiduciary duties. We situate our contributors’ chapters within that framework.

Keywords: fiduciary obligations, fiduciary duties, fiduciary law, corporate governance, business law