Nexus of contracts

From Wikipedia, the free encyclopedia

The nexus of contracts theory is an idea put forth by a number of economists and legal commentators (most notable Frank Easterbrook of the United States Court of Appeals for the Seventh Circuit) which asserts that corporations are nothing more than a collection of contracts between different parties - primarily shareholders, directors, employees, suppliers, and customers. Proponents of this theory contend that all disputes about the obligations of a particular corporation should be settled by resort to the methods used to interpret contracts, and that courts should not imply the existence of fiduciary duties on behalf of corporate officers and directors.