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About this book

An exciting new textbook which presents critical perspectives on corporate and commercial law. Focussing on the key areas of trade and transactions, intellectual property, corporations and finance, it covers each of the areas of commercial and company law that would typically be offered to undergraduate and postgraduate law students.

The chapters are written by acknowledged experts in the field and are aimed at undergraduates, post graduates and lecturers who wish to further their understanding of this area. Each of the authors focuses on an area within their subject and draws out the political, the controversial and the discursive, providing essential reading for undergraduate dissertation topics and postgraduate analysis.

Table of Contents

Chapter 1. Contract Law as Regulation: Relational and Formalist Approaches

Abstract
This chapter first considers how contract law best functions as a regulatory tool. The second debate asks which institutions should be responsible for devising contractual regulations. These lead into the third debate, which considers whether commercial contract law should aim to foster and support ‘relational contracting’ or a more ‘minimalistic’ approach. We move from abstract to concrete questions. Each is heavily contested. The chapter provides a tour d’horizon of the most important and divisive debates in commercial contract law.
Jonathan Morgan

Chapter 2. The Common Law of Contract: Essential or Expendable?

Abstract
The functions and significance of contract law, on the classical model at least, appear clear and undeniable. Along with the recognition and protection of property rights, a state-endorsed system of contract enforcement is one of the key constituents of a market economy. The law tells us how legally enforceable agreements are created, and it polices the contract contents, the excuses for non-performance and the remedies for breach. The principle of freedom of contract lies at its heart: individuals, rather than the state, are the best judge of their own preferences and are best equipped to identify opportunities for the pursuit and satisfaction of these preferences via a system of voluntary exchange. As well as providing the rules governing this process, contract law has generated a rich theoretical literature, using a variety of methodological perspectives to scrutinise the nature of contractual liability. There seems little room for doubt that a robust system of contract law lays legitimate claim to be a pillar of the liberal social and economic order and one of the hallmarks of a developed nation-state. Small wonder then that contract law occupies a distinct space in the curriculum of the UK undergraduate law degree. It is one of the foundations of legal knowledge and a core subject for the aspiring legal professional. It provides a grounding in common law method and forms the bedrock upon which the more specialised regulation of specific contracts (between employer–employee, consumer–business and landlord–tenant, for example) is built.
Catherine Mitchell

Chapter 3. Labour Law and Practices: Workers Paying the Price for Capitalist Failure?

Abstract
In this chapter, we investigate the interaction between company law, corporate governance and labour law. As we examine some of the key debates that feature within this interaction, we advance the argument that company law allows, and the corporate governance system encourages, corporations to hire workers under highly exploitative terms. Exploring the issue from a corporate governance perspective, we argue that the regulation of companies and broader corporate governance framework have features that encourage and depend on precarious labour. Our consideration of the debates leads us to suggest that the corporate governance imperative is to cut costs and transfer risks and that precarious labour appears as a logical response to this challenge. The traditional contractarian view would support a suggestion that any precariousness is met by robust protection provided by labour law. However, we argue that this does not reflect either the structure of the employment contract or the current deficiencies of statutory law, neither of which is capable of accommodating current labour practices in an entirely convincing manner. Moreover, we argue, this assumption brings with it new risks for corporate governance. What is needed is systemic change so that workers are valued and respected.
Charlotte Villiers, Roseanne Russell

Chapter 4. A Good Idea Gone Bad. Can We Still Justify Patent Monopolies?

Abstract
Intellectual property (IP) is a surprisingly strange beast. Whilst society as a whole seems to have become somewhat accustomed (or, as some critics might argue, inured) to the concept that the products of intellectual effort are protected by property rights, the true (and problematic) character of IP itself, the normative questions which surround its existence, and its deep societal impact sometimes appear unappreciated.
Peter S. Harrison

Chapter 5. Is Trade Mark Law Fit for Purpose?

Abstract
For many intellectual property (IP) scholars, trade mark law can be divided into two parts: the part that needs to be reformed and the part that needs to be abolished. The part that needs to be reformed is the traditional, consumer-focused element of trade mark law. Although there is general acceptance that signs and symbols that denote the trade origin of goods and services deserve some degree of legal protection, there is also now widespread concern that trade mark law has become misshapen. The problems are manifold but include the fact that bars to registrability have been set too low; tribunals routinely apply the likelihood of confusion test too broadly; the notion of ‘confusion’ has been expanded in ways that are problematic; the circumstances in which we are prepared to tolerate some risk of confusion have not been properly articulated; defensive doctrines within trade mark law remain underdeveloped; mechanisms for detecting marks that should be removed from the register are ineffective; and remedies for trade mark infringement have become draconian. This long list of problems now needs to be viewed alongside recent scholarship that is challenging two of the largely unspoken assumptions on which the consumer-focused branch of trade mark law rests: first, that the supply of traditional trade marks such as words and devices is effectively infinite and, second, that the law’s only concern is to increase the supply of reliable information in the marketplace.
Robert Burrell

Chapter 6. Copyright and Invisible Authors: A Property Perspective

Abstract
The inspiration for this chapter is the debate as to whether copyright, and indeed other forms of intellectual property (IP), are proprietary in nature. Some contributions to this debate have been formalistic in nature, focusing on the attributes of property and whether copyright works share sufficient characteristics with other types of thing that the law accepts can be the object of property rights. Other contributions have had a more explicit normative or philosophical focus. For instance, one line of argument doubts whether some explanations for property in tangible things apply to intangible ‘things’ such as copyright. Consider justifications based on the tragedy of the commons. The essence of this argument is that when resources are held in the commons, free to be used by all, people will typically maximise their individual, short-term interest even if this degrades the resource and is inimical to its long-term sustainability. Private property rights have been identified as one way to counteract this tendency, on the basis that they give owners a direct stake in the ongoing existence and quality of the resource. But it has been said that this justification is inapt for copyright because copyright works, being intangible, can be used simultaneously and repeatedly by many people (i.e., are non-rivalrous) with no depletion or degradation (i.e., are non-exhaustible). In fact, it has been said that the problem for copyright is the ‘tragedy of the anticommons’: that works end up being underused because of difficulties in clearing rights. With this and other concerns about a proprietary conception of copyright, numerous scholars explain copyright not as property but as a limited monopoly granted by the state to encourage and reward certain forms of intellectual and artistic endeavour.
Emily Hudson

Chapter 7. Shareholders and Directors: Entitlements, Duties and the Expansion of Shareholder Wealth

Abstract
Company law and governance exist for one purpose: to expand and protect shareholder income and power. This chapter explores some of the implications of this and some of the resulting paradoxes. A core paradox is that by promoting shareholder value, company law and modern corporate governance simultaneously and necessarily promote the interests of company executives whose own fortunes are bound to that value. However, while achieving shareholder value is considered a success, and a rising Financial Times Stock Exchange (FTSE) a marker of economic good health, high executive pay is considered a modern-day scandal, a societal blight. Other curiosities include the considerable scholarship that links shareholder value-driven corporate activity to societal problems such as inequality, or lack of investment in innovation and productivity, but that simultaneously clears shareholders of culpability. Executives, not shareholders, are to blame. Indeed, shareholders and other claimants on corporate profit are thought to be part of the solution to shareholder value-driven corporate activity. They are entrusted with increasing monitoring responsibilities and with control of key corporate governance mechanisms, manifest in such developments as shareholder say on pay, the Stewardship Codes and the Shareholder Rights Directives. That these contradictions can co-exist evidences the considerable debate, not to mention confusion, in company law and governance around shareholders, directors and their varying duties and entitlements.
Lorraine Talbot

Chapter 8. Debating Theories of the Company and Separate Corporate Personality

Abstract
The corporate form of business organisation is today a fundamental feature of modern life and modern law. In large part, its ubiquity is due to the principle of separate corporate personality, which is of central importance to company law and entails the complete separation of the company and its members. Indeed, this single idea provides a unique and powerful force for viewing the company as a juridical entity, or ‘thing’, which is capable of suing, and being sued, in its own name, entering into contracts, incurring debt, and owning property. However, the company’s independent legal existence has long generated difficulties for the law and how we think about that law. For over a century, philosophers, political scientists, economists, and, above all, jurists and judges have fervently debated how best to understand the essential nature of the company. The distinct theories advanced not only provide doctrinal explanations, in point of law, of what the company is but also seek to determine questions, of a normative nature, about how the company should be understood. This fascinating and intellectually rich discourse tends to focus, as a historical matter, on philosophical and metaphysical questions that invoke what is commonly regarded as the ‘fiction/artificial entity theory’ and the ‘real entity theory’ or, more recently, on the economic ‘contractarian/nexus of contracts theory’. However, different theories are not readily comparable as they frequently deal with different aspects of corporate personality. Consequently, their influence upon company law has been to generate misunderstanding and conflict.
Daniel Attenborough

Chapter 9. Hostile Takeovers: Corporate Governance Solution or Social Cost?

Abstract
The hostile takeover is perhaps the most important and controversial – and certainly the most spectacular – feature of the UK corporate governance landscape. This chapter begins with the conventional description of takeovers, which insists that they are simply transfers of shares from dispersed shareholders to a new majority shareholder. It then looks at how changes to law and soft law turned transfers of shares into transfers of corporate control, which in turn came to be viewed as a solution to the ‘agency’ problem of corporate governance. Managerial discretion was truncated as directors focused on keeping the shareholders happy and the share price high in order to head off the threat of takeover. It then explores some of the critical debate about takeovers, focusing on the arguments that they create social costs, encourage short-termism and allow the breach of implicit contracts between employees and companies. It concludes with some thoughts on the prospects for reform.
Andrew Johnston

Chapter 10. The Taxonomy of Taxation

Abstract
Tax law is inherently political. At the very least, it introduces an underlying tension in politics but is more often at the forefront of political debate. Tax is at the centre of political ideological conflict, and elections are won or lost based on tax policy. Political parties often define themselves by their position on tax with a spectrum of views ranging from a pro-business, free market economy platform to a pro-worker, egalitarian platform. ‘Taxation without representation is tyranny’, generally quoted as ‘no tax without representation’, eloquently captures the political nature of tax. More recently, reform of the tax system has been influenced by the global financial crisis and fiscal conservatism. The international tax system in particular has undergone significant reform in an attempt to address base erosion and profit shifting by multinational entities. This reform has seen jurisdictions around the world reforming their domestic tax regimes to more closely align with 21st-century corporate practices and ensure effective and efficient taxation of global corporate groups and networks.
Kerrie Sadiq, Bronwyn McCredie

Chapter 11. The Law and Regulation of Banks and Money

Abstract
The global financial crisis (GFC) moved banks and money to the centre of the public’s attention. The aim of this chapter is to move beyond the conventional account offered to law students and to show that banks and money give rise to a number of fundamental questions about how we order our society and distribute wealth. Whereas conventional economic accounts pay little attention to money, other, more heterodox accounts show that both central banks and private banks can create money out of nothing. The state relies on interest rates set by the central bank as well as banking regulation to prevent private money creation from resulting in economic and financial instability, but these tools are necessarily imperfect. The chapter then looks at the response of the state to the financial crisis, contrasting the politically driven arguments in favour of fiscal austerity with the more relaxed approach to monetary policy, which has further entrenched income and wealth inequality. We conclude with a call for more scrutiny of private banks and politicians.
Andrew Johnston, Jay Cullen, Trevor Pugh

Chapter 12. Financial Regulation and Market (In)Efficiency

Abstract
In 2014, a Harvard law student wrote in an essay that the ‘most repeated word in my first year curriculum was not justice, or liberty, or order. It was efficiency’. This rather troubling observation reflects the way in which much modern legal scholarship approaches questions of law and financial regulation. Over the past few decades, lawyers have ceded much of the intellectual ground for legal and regulatory analysis to economists, and the line between law and financial regulation is becoming increasingly blurred. Because the principles of such laws are derived from ‘mainstream’ economic analysis, legal systems, particularly in the Anglo-American spheres, increasingly reflect what is taught in mainstream economics classrooms about the behaviour of financial markets.
Jay Cullen
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