Nexus of Contracts

(redirected from Nexus of Contract)

Nexus of Contracts

Any contract or other thing that is related to anything else, especially something that causes something else.
Mentioned in ?
References in periodicals archive ?
Neoclassical economic theorists, influenced by the earlier work of Adolph Berle but adapted to their interests, posited that the firm was a legal fiction that was no more than a "nexus of contracts," and it was the shareholders, or principals, that had a legitimate claim on the firm's net profits.
Not surprisingly, he finds that the investor capitalism model is operating regardless of the fact that the nexus of contracts that forms the foundation of agency theory is basically an ideological belief that does not rest on any foundations in mainstream corporate law or judicial holdings.
THE VULNERABILITIES OF THE "NEXUS OF CONTRACTS" PARADIGM
The seeds for Boilermakers and ATP Tour were sewn three decades ago with the metaphorical pronouncements by many commentators that the corporation is but a "nexus of contracts." (10) The expression is impactful because it is more than just a metaphor; it has substantive bite.
* Kenneth Ayotte, Northwestern University, and Henry Hansmann, Yale University, "A Nexus of Contracts Theory of Legal Entities"
(2) The nexus of contracts theory is meant to point up the voluntary, market-oriented nature of the firm and to dismiss the notion that the corporation owes anything to the state.
Moreover, they might signal the final gasp of the nexus of contracts theory--at least in its descriptive guise.
In the early 1980s, the intuitive mistrust of government that underlies so many aspects of American life (2) was given an explicit theoretical foundation in the form of the so-called 'nexus of contracts' theory of the corporation.
(3) Berkahn uses the term 'contractarian' to describe both the conception of the company as founded on a contract between the shareholders and the modern nexus of contracts analysis of the corporation.
Second, there is the 'nexus of contracts' view of the company, which understands the company as simply a legal entity for contracting.
Viewing the firm as a nexus of contracts at first instance provides a conceptual basis for challenging the dominant shareholder ideology which, critics such as Lazonic and O'Sullivan (2000) argue, has proved to be counterproductive to both the generation and distribution of wealth in the Anglo-American variety of capitalism.
* Kenneth Ayotte, Northwestern University Law School, and Henry Hansmann, Yale University, "A Nexus of Contracts Theory of Legal Entities"