Nexus of contracts

The nexus of contracts theory is an idea put forth by a number of economists and legal commentators (most notably Michael Jensen and William Meckling as well as Frank Easterbrook) 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.