Agency, Corporations, and Fiduciary Duties

The Chief Justice of the Delaware Supreme Court has recently published an excellent piece titled The Moral Underpinnings of Delaware's Modern Corporate Fiduciary Duties. Hat tip to colleague Haskell Murray for sending it to me. It doesn't seem to be available for download on SSRN so if you're interested you'll have to find volume 26 of the Notre Dame Journal of Law, Ethics, and Public Policy.

Chief Justice Steele is interested in the duties of corporate directors to the corporation and its shareholders, not the moral obligations of the corporation to people or ours to it. I've blogged several times on the latter. (See here, here, and here.)

What first interests me about Steel's piece is the firm place he finds for morality as such as the justification for the law of fiduciary duties. Even though he's a professing "contractarian" when it comes to the nature of the corporate entity, he's aware that the contractarianism alone or contractarianism's theoretical underpinnings in neo-classical economics are insufficient to explain the law as it is. For one, I'm thankful that someone of Chief Justice Steele's stature is willing to acknowledge the place of morality in the law rather than making up a "just-so" story to explain the law in reductionistic terms.

I'm also interested to see that Steele is forthright in describing the history of the law of fiduciaries. In other words, he explains this aspect of the law in terms of the biblical record and developments in canon law, two important but under-regarded "pieces" of our current law. I wish, however, that he had cited a few more resources to support his historical survey. While I respect former colleague Mary Szto's work, Charles Reid has also written extensively on this topic and would have added support to the Chief justice's conclusions.