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Not ‘Like Sailors or Idiots or Infants’: Social Welfare Based Limits on Private Ordering in Business Association Law

Published online by Cambridge University Press:  19 April 2007

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Abstract

Starting from the suggestion that external costs are created by the plenary private order regime – in short, that ‘private ordering’ is not truly private – the author advocates restrictions based on social welfare, and not traditional fairness, concerns when crafting limits on the extent to which participants in business firms can reorder their relations inter se from the statutorily defined relationship. A constructive start to this discussion would be to acknowledge that private ordering generates costs, some of which are social. Having done so, we could agree that an aggregate net social calculation of value and cost is appropriate to see if plenary private ordering is justified and, if not, to determine the appropriate level of private ordering. This policy discussion provides a valuable reminder of the value of commonality in these matters. Jurisdictions benefit when we adopt common modes of analysis, shared nomenclature and harmonisation statutes. That value of commonality has been too often put aside as we are guided by market-oriented generalisations which focus too heavily on the presumed benefits to individual participants and firms and ignore the social dimensions of public policy formation.

Type
Articles
Copyright
T.M.C. Asser Press 2007

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