Conceptions of Legal Entities

Conceptions of Legal Entities

Professor Reinier Kraakman
Spring 2016 course
M 5:00pm - 7:00pm in WCC Room 3009
2 classroom credits

Prerequisites:There are no prerequisites for this course although an acquaintance with corporate law is helpful.

Exam Type: Last-class take-home exam. Grading will be based on the examination and class participation.

This course explores disparate conceptions of legally-recognized entities in private law, with an emphasis on for-profit legal entities such as corporations, partnerships, LLCs, and their analogues in civil law jurisdictions. Readings range from law-and-economics constructions of legal entities to traditional jurisprudential views, including the treatment of corporations as “persons” in the U.S. constitutional caselaw. The readings also contrast legal entities in common law and civil law jurisprudence. The motivating question throughout is: why should the law accord legal personality to for-profit firms? Some advanced legal systems such as Roman law made very little use of fictional legal entities in the “for profit” sector. What part of recognizing legal entities in more recent history is about reducing the costs of raising capital for large enterprises? What part of it is about imposing responsibilities on collective actors that would emerge whether or not the law recognized their independent legal existence? As a positive matter, when does the law go beyond recognition to impute interests and actions to legal entities that it does not impute to their stakeholders? What matters in classifying legal entities, functional characteristics or authorizing statutes? Is a publicly-traded LLC that mimics the governance structure of corporation in its founding agreement “really” a corporation? Finally how can legal entities be liable for tortuous or criminal conduct when the evidence cannot support liability for any of their employees, members, or other decisionmakers? More generally, why is the whole of a legal entity ever more than, or different from, the sum of its parts?

Subject Areas: Business Organization, Commercial Law, and Finance