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Murdoch University Electronic Journal of Law |
Wormes in the entrayles: the corporate citizen in law?
Author: | Neil Andrews Lecturer in Law, University of Canberra |
Issue: | Volume 5, Number 2 (June 1998) |
This, then, is the essence of commercial law - the accommodation of principles, rules, practices and documents fashioned by the world of business: the facilitation, rather than the obstruction, of commercial development. It is part of the genius of the common law that despite the ritual and formalism of its earlier life it has proved able to respond to the challenges of industrial growth. Goode RM, Commercial Law (Harmondsworth: Penguin Books, 1982) 984.
I sought for certainty. I was oppressed and disheartened when I found that the quest for it was futile ... As the years have gone by, and as I have reflected more and more on the nature of the judicial process, I have become reconciled to the uncertainty, because I have grown to see it as inevitable.[18]
[1] Holmes OW, 'The Path of the
Law in Oliver Wendell Homes, Collected Legal Papers (New York: Harcourt,
Brace, 1920)
[2] O'Neill O, Towards Justice and
Virtue: A Constructive Account of Practical Reasoning (Cambridge: Cambridge
University Press, 1996) 187. Other virtues she identifies are also relevant
in the context of the company. The 'executive virtues' could apply both
to corporate decision making and the actions of individual executives.
These virtues include: 'self-respect, self-control and decisiveness; courage
and endurance, as well as numerous contemporary conceptions of autonomy;
insight and self-knowledge, and various traits that are cognitive and practical,
such as efficiency, carefulness and accuracy.' She also identifies substantive
social virtues. These include 'altruism, from sympathy and beneficence
to care and concern' but she notes that these virtues are controversial.
Finally there are the superogatory virtues which are 'eptimomized in the
action of saints and heroes.' These, because they go beyond duty, must
be regarded as optional. Ibid. 187-89.
[3] Grey TC, 'Bad Man from Olympus',
New York Review of Books 13 July 1995, 4.
[4] Gilmore, his authorised biographer,
attacked this 'myth' which depicted him as 'the tolerant aristocrat, the
great liberal, the eloquent defender of our liberties, the Yankee from
Olympus.' Gilmore drew attention to the darker side of Holmes. Holmes he
said, was 'savage, harsh, and cruel' and 'a greater man and a more profound
thinker than the mythical Holmes ever was.' Ibid 4. Holmes may have agreed.
He loved Rabelais. Sometimes in Washington he attended burlesque shows
and was said to have remarked, 'I thank God I am a man of low tastes.'
When the newly inaugurated President Roosevelt called on him after his
retirement he found him reading Plato. 'Why do you read Plato, Mr. Justice?'
he asked. 'To improve my mind, Mr. President,' replied the 92 year old
man.
[5] Holmes OW, The Common Law (Boston:
Little Brown, 1949) 1.
[6] Holmes, above n 1, 167.
[7] In the 'Preface' to A Selection
of Cases on the Law of Contract (Boston: Little, Brown & Son, 1871)
viii Langdell wrote: 'Moreover, the number of fundamental legal doctrines
is much less than is commonly supposed; the many different guises in which
the same doctrine is constantly making its appearance, and the great extent
to which legal treatises are a repetition of each other, being the cause
of much misapprehension. If these doctrines could be so classified and
arranged that each should be found in its proper place, and nowhere else,
they would cease to be formidable from their number.' Holmes said of Langdell.
The: 'ideal in the law, the end of all his striving, is the elegantia juris,
or logical integrity of the system as a system. He is, perhaps, the greatest
living legal theologian. But as a theologian he is less concerned with
his postulates than to show that the conclusions from them hang together.
... so entirely is he interested in the formal connection of things, or
logic, as distinguished from the feelings which make the content of logic,
and which have actually shaped the substance of law. The life of the law
has not been logic; it has been experience. The seed of every new growth
within its sphere has been a felt necessity.' Holmes OW, 'Review of CC
Langdell, Summary of the Law of Contracts and WR Anson, Principles of the
Law of Contract' (1880) 14 American Law Review 233, 234.
[8] Beale Joseph H, A Treatise on
the Conflict of Laws (Cambridge, Mass: Harvard University Press, 1916)
135.
[9] Perry AL, Political Economy
(New York: Scribner, Armstrong & Co, 18th ed) 248. Kennedy D, 'The
Role of Law in Economic Thought; Essay on the Fetishism of Commodities'
(1985) 34 American University Law Review 939, 941-58.
[10] Spencer H, The Man Versus
the State (London: Williams & Norgate, 1884) 15-16.
[11] Holmes thirty years before
had written: 'In the last resort a man rightly prefers his own interest
to that of his neighbours. And this is true in legislation as in any other
form of corporate action. All that can be expected from modern improvements
is that legislation should easily and quickly, yet not too quickly, modify
itself in accordance with the will of the de facto supreme power in the
community, and that the spread of an educated sympathy should reduce the
sacrifices of minorities to a minimum. But whatever body may possess the
supreme power for the moment is certain to have interests inconsistent
with others which have competed unsucessfully. The most powerful interests
must be more or less reflected in legislation; which, like every other
device of man or beast, must tend in the long to aid the survival of the
fittest.' 'Summary of Events: The Gas Stokers' Strike' (1873) 7 American
Law Review 582, 583.
[12] 198 US 45 (1905).
[13] In Tyson & Bro v Banton
273 US 418 (1927) Holmes J, 466, dissented to uphold a law restricting
the resale price of a theatre ticket to 50 cents above the box office price.
He wrote: 'the legislature may forbid or restrict any business when it
has sufficient force of public opinion behind it.'
[14] Hart HLA, 'American Jurisprudence
Through English Eyes: The Nightmare and the Noble Dream' [1977] Georgia
Law Review 968, 983.
[15] Gilmore, who argues that
Holmes was a Langdellian formalist nominates Cardozo as the harbinger of
this jurisprudence. Gilmore G, The Ages of American Law (New Haven: Yale
University Press, 1977) 48. Gilmore argued that the Storrs lectures delivered
by Benjamin Cardozo at Yale Law School in 1921 opened this age. Gilmore
G, 'The Storrs Lectures: The Age of Anxiety' (1975) 84 Yale Law Journal
1022. In that lecture Cardozo claimed that judges made law by adopting
the methods of philosophy, history, tradition, sociology. Duxbury quotes
contemporaries who referred to it as 'hopeless nihilism'. Duxbury N, 'Jerome
Frank and the Legacy of Realism' (1991) 18 Journal of Law and Society 175,
193. Gary Minda argues that the Age of Anxiety disappeared with the new
consensus theories of law generated after WWII but the Age of Anxiety then
returned. Minda G, Postmodern Legal Movements: Law and Jurisprudence at
Centuries End (New York: New York University Press, 1995) 283 note 2.
[16] Duxbury N, 'The Reinvention
of American Legal Realism' (1992) 12 Legal Studies 137.
[17] Gilmore, above n 15, 77.
[18] Cardozo BN, The Nature of
the Judicial Process (New Haven: Yale University Press, 1921) 29, 166.
[19] Grey, above n 3, 4. Holmes
may have agreed. He loved Rabelais. Sometimes in Washington he attended
burlesque shows and was said to have remarked, 'I thank God I am a man
of low tastes.' The newly inaugurated President Franklin D Roosevelt called
upon the retired justice and found him reading Plato. 'Why do you read
Plato, Mr. Justice?' 'To improve my mind, Mr. President,' replied the 92-year-old
man. Morris Cohen wrote of Holmes' jurisprudence: 'But no one group can
claim Justice Holmes as its own unless it shares respect for the complexity
of the legal situation and exercise the same caution against hastily jumping
from one extreme error to the opposite.' Cohen MR, 'Justice Holmes and
the Nature of Law' (1931) 31 Columbia Law Review 352, 363.
[20] Elliott DE, 'Holmes and Evolution:
Legal Process as Artificial Intelligence' (1984) 13 Journal of Legal Studies
113, 116-17.
[21] White GE, 'The Rise and Fall
of Justice Holmes' (1971) 39 University of Chicago Law Review 51, 56.
[22] Posner RA, Problems of Jurisprudence
(Cambridge, Mass: Harvard University Press, 1993) 26-7. Dewey asserted:
'that law was best seen as an empirical social science.' Schlegel JH, American
Legal Realism and Empirical Social Science (Chapel Hill: University of
North Carolina Press, 1995) 8. Moskowitz DH, 'The Prediction Theory of
Law' (1966) 39 Temple Law Quarterly 413. The debt of the predictive theory
of law to the pragmatists is shown by William James' statement: 'The truth
of an idea is not a stagnant property inherent in it. Truth happens to
an idea. It becomes true, is made true by events. Its verity is in fact
an event, a process: the process namely of verifying itself, its veri-fication.
Its validity is the process of its validation.' James W, Pragmatism: A
New Name for Some Old Ways of Thinking (New York: Longmans, Green &
Co, 1910) 201.
[23] Pound later denied that he
was a Realist but had similar interests as a result of his sociological
perspective. Law was not just the rules but included the other elements
which drove legal development. Pound was concerned with the values which
underlie the law and how they ought to be developed and applied. Cotterell
suggests that it has its origins in the disorganisation of the US legal
profession and frontier life. The isolated court houses, in the absence
of legislatures, became the focus of government. Cotterell R,The Sociology
of Law: an Introduction (London: Butterworths, 1984) 156 Pound saw the
judge as a social engineer and was critical when judicial values diverged
too much from those of the people which he derided as 'mechanical jurisprudence'.
Pound R, 'Mechanical Jurisprudence', (1908) 8Columbia Law Review 605. Pound
supported legislation initially as clarifying confused doctrine and suggesting
lines of development to the judges. The measures of values to be used by
the judges proved elusive and by the end of his life he saw the judges
as embattled defenders of legal reason surrounded by mindless legislative
rule making. Cotterell, above n 23, 162.
[24] Dewey J, 'Logical Method
and Law' Cornell University Law Review 17, 21 cites Holmes.
[25] Lord Mansfield CJ R v Dawes
and Martem (1767) 4 Burr 2120. The then Attorney-General, Michael Lavarch,
introduced the corporate law simiplification program with the objective
of relieving 'business from the uncertainty caused by constant change to
the Corporations Law'. Lavarch M, 'The Government's Approach to Corporate
Law Reform' (1994) 4 Australian Journal of Corporations Law 1, 3.
[26] Goodrich P, Law in the Courts
of Love: Literature and Other Little Jurisprudences (London: Routledge,
1996) 201. Letizia Gianformaggio considers certainty in this context to
mean: 'But in order for the decision, the sole decision that has to count
as such, to be totally predictable and verifiable it must (= can only)
be the sole possible outcome of a procedure, the obligatory end of a road
that could have been anticipated and gone over again.' Gianformaggio L,
'Legal Certainty, Coherence and Consensus: Variations on a Theme by MacCormack'
in Nerhot P (ed) Law, Interpretation and Reality: Essays in Epistomology,
Hermeneutics and Jurisprudence (Dordrecht: Kluwer Academic Publishers,
1990) 402, 403.
[27] Bix B, Law, Language and
Indeterminacy (Oxford: Clarendon Press, 1993) 1.
[28] DeMott notes that it has
largely been developed through reasoning by analogy. She believes it defies
more specific definition as it arises in factual situations difficult to
designate in advance which are generally in the interstices of other legal
principles as a result of its origin in the corrective equity of the Chancellor.
DeMott DA, "Beyond Metaphor: An Analysis of Fiduciary Obligation (1988)
Duke Law Journal 879, 881. Ruder quotes Frankfurter J in SEC v Chenery
318 US 80(1943): 'to say that a man is a fiduciary only begins analysis;
it gives directions to further inquiry. To whom is he a fiduciary? What
obligations does he owe as a fiduciary? In what respect has he failed to
discharge these obligations?' Ruder DS, 'Duty of Loyalty - A Law Professor's
Status Report' (1985) 40 Business Law 1383, 1386.
[29] Mason A, 'Themes and Prospects' in Finn PD (ed) Essays in Equity
(Sydney: Law Book Co, 1985) 246, 246. He observed later that: 'The quest
for a precise definition which identifies the characteristics of the fiduciary
relationship, in particular other relationships which attract equitable
relief, continues without evident signs of success.' Mason A, 'The Place
of Equity and Equitable Remedies in the Contemporary Common Law World (1994)
Law Quarterly Review 238, 238. His view is supported by Glover. Glover
J, Commercial Equity: Fiduciary Relationships (Sydney: Butterworths, 1995)
22-3.
[30] Keen I, Knowledge and Secrecy
in an Aboriginal Religion (Oxford, Clarendon Press, 1994) 12-15, 242-4.
Munn observed the simplicity of Walpiri design elements which can stand
for a wide range of meanings. Munn N, Walbiri Iconography: Graphic Representations
and Cultural Symbolism in Central Australian Society (Ithaca, Cornell University
Press, 1973).
[31] They were to have equity
'before their eyes', to consider the right and equity before the strict
and exact rule and reminded to believe 'in the heart' in order to do justice.
Goodrich, above n 25, 180-1.
[32] Daube notes that in classical
times '[t]he have-nots break the law, the haves skirt it.' He recognised
that there were countless forms of these but reduced them to three types:
'(1) Where a law prohibits a certain transaction - sale or gift or interest
- an alternative transaction is substituted which will produce the nearest
effect - gift plus countergift for sale, sale at a nugatory price for a
gift, a late-repayment-penalty with an impossibly early repayment-date
for interest. (2) Where a law debars a certain group from a transaction
- a governor from money-lending in his province - an interposita persona
is used - he does business through his cousin ... (3) Where a law attaches
an advantage or disadvantage to a certain quality, this is indeed acquired
or shed but in a fashion that drains the change of substance.' Daube D,
'Fraud No. 3' in MacCormick N and Birks P, The Legal Mind: Essays for Tony
Honoré (Oxford: Clarendon Press, 1986) 1, 1-2.
[33] Goodrich, above n 25, 183.
[34] Maclean I, Interpretation
and meaning in the renaissance: the case of law (Cambridge: Cambridge University
Press, 1992) 3-11, 89-95, 207-14. There was from the thirteenth century
widespread criticism of the view that the law could be known objectively
and stated with certainty. A new maxim emerged: the person who knows how
to dissimulate knows how to rule. The causes of this were also recognised
in issues which are familiar to contemporary lawyers: the incorporeal nature
of legal concepts, the temporal nature of judicial practice, the future
orientation of legal transactions and the uncertain, probable or simply
conjectural character of doctrinal reason. In a brief account of the common
law tradition he notes that it was shaped by the influences of Roman law.
Ibid 181-6. Goodrich P, Languages of law: from logics of memory to nomadic
masks (London: Weidenfeld & Nicolson, 1990), 83-90.
[35] Ibid 152-6.
[36] Galbraith JK, The New Industrial
State (Boston: Houghton Mifflin, 3rd ed rev, 1978) 76-7 noted that General
Motors had little in common with most other companies. 'The answer is that
there is no such thing as a corporation. Rather there are several kinds
of corporations all deriving from a common, flexible and highly accommodating
legal framework. Some are subject to the market; others reflect varying
degrees of adaptation to the requirements of planning and the needs of
the technostructure. The person who sets out to study buildings on Manhattan
on the assumption that all are alike will have difficulty in passing from
surviving brownstones to the skyscrapers. And he will handicap himself
even more if he imagines that all buildings should be like brownstones
and have load-carrying walls and that others are abnormal. So precisely
it is with the study of corporations.'
[37] The Corporations Law introduces
another element into this category with the power of the Australian Securities
Commission to waive compliance with various provisions. While it must be
exercised in accordance with legal rules for understanding rules for exercising
discretions some observers have been unable to detect a pattern and see
it as favouring sides in takeovers. Pierpont, 'ASC Dosen't Rule the Waves
- It Waives the Rules' Australian Financial Review (24 January 1997) 76,
42.
[38] Krygier M, 'Critical Legal
Studies and Social Theory - A Response to Alan Hunt' (1987) 7 Oxford Journal
of Legal Studies 26, 34-7.
[39] Gordon RW, 'American Law
Through English Eyes: A Century of Nightmares and Noble Dreams' (1996)
84 Georgetown Law Journal 2215, 2238-9 referring to Duxbury N, Patterns
of American Jurisprudence (Oxford: Clarendon Press, 1995) 501-2.
[40] There are a number of writers
who do take indeterminacy seriously. See McEwin R I, 'Public Versus Shareholder
Control of Directors' (1992) 10 Company and Securities Law Journal 182.
McEwin notes that 'there is a widespread belief that director misbehaviour
is not sufficiently penalised.' One explanation is a perception that non-majority
shareholders have little control over setting and enforcing directors'
standards of behaviour. Ibid 182. He also observes: 'Courts face the same
problems setting director standards. They do not have the information to
set standards.' Ibid 201. He argues that regulatory agencies do not have
enough information to set standards for directors which may need to vary
from industry to industry: 'However, the development of the corporation
as a separate legal identity has clouded the true agency relationship between
shareholders and directors and effectively prevented shareholders from
ensuring that directors act in the best interests of shareholders when
market forces are ineffective (due to lack of competition in product and
capital markets' Ibid 202. He argues that we know little about either the
public or private enforcement of these rights. 'Certainly, the law regulating
company directors is so uncertain that considerable resources are used
to fight important cases in the courts.' He argues that these to be subject
to private negotiation and enforcement. Ibid 203-4.
[41] D'Aprix RM, In Search of
a Corporate Soul (New York: Amacon, 1976) 'Chapter 1 The American Corporation:
Dogma and Turmoil', 7-29. Derham DP, 'Theories of Legal Personality' in
Webb LC (ed) Legal Personality and Political Pluralism (Melbourne: Melbourne
University Press, 1958) 1. Stoljar SJ, 'The Corporate Theories of Frederic
William Maitland' in Webb LC (ed) Legal Personality and Political Pluralism
(Melbourne: Melbourne University Press, 1958) 20, 43-4. Stoljar SJ, Groups
and Entities: An Inquiry into Corporate Theory (Canberra: Australian National
University Press, 1973) iii, notes that '[w]hat is commonly known as 'corporate
personality' raises difficult questions which have been amongst the most
controversial in law and legal theory.' He adopts a different approach
but his book shows how extensive this issue was discussed in the 30 years
prior to its publication. While discussion has been continued over the
'nexus of contracts' model it does not have the same depth or link to wider
legal theory as it did in this earlier period. Dan-Cohen M, Rights, Persons,
and Organizations: A Legal Theory for the Bureaucratic Society (Berkeley,
Calif: University of California Press, 1986) Dan-Cohen describes the the
prevailing legal theory of the group is based on a two-tier conception
of society that comprehends only individuals and government. This tends
to either personify organizations, investing them with the same rights
and responsibilities as individuals, or to dissolve them into a mere aggregation
of individuals that lacks independent jurisprudential significance. Equating
organizations with individuals ignores the collective character of organizational
decisionmaking. Aggregation falsely assumes that the decisions and goals
of an organization can be reduced to those of its individual members.
[42] Shamir uses a socio-historical
analysis to show that American lawyers used the legal uncertainty created
by New Deal legislation to protect and improve their position in the American
social order. The elite lawyers resisted the extension of discretion in
the hands of government officials to maintain the benefits which they received
from the 'rule of law.' The Realist lawyers who joined the New Deal administration
abandoned their radical critique of law to embrace the 'rule of law' and
become government officers. Shamir's analysis is flawed in his failure
to recognise the altruism of both groups, particularly people like Jerome
Frank. 'Book Note: The Relevance of Moral Agendas' (1996) Harvard Law Review
846-51 (a review of Shamir R, Managing Legal Uncertainty: Elite Lawyers
in the New Deal (Durham, NC: Duke University Press, 1995). Llewellyn K,
'Across Sales on Horseback' (1939) 52 Harvard Law Review 725, 741. Llewellyn
speculated that most disputes between business people were resolved by
arbitration in the United States in the 1930s and that only bitter personal
antagonisms go to court. Llewellyn K, 'On Warranty of Quality, and Society'
(1936) 36 Columbia Law Review 699, 711.
[43] Eisenberg MA, The Nature
of the Common Law (Cambridge: Harvard University Press, 1988) 156-57 echoes
the predictive theory of Holmes. He writes: 'What then does the common
law consist of? It consists of the rules that would be generated at the
present moment by institutional principles of adjudication. ... To determine
the content of the common law, courts do not begin with doctrinal propositions
adopted in past texts and work backward to determine their validity; they
begin with a set of institutional principles and work forward to generate
legal rules. These institutional principles instruct the courts that in
determining the law they should take account not only of doctrinal propositions
promulgated by officials of the relevant jurisdiction, but also of the
criticism and understanding of those propositions expressed in the professional
discourse, doctrinal propositions established in the professional literature,
and applicable social propositions. The rules generated by the interplay
among those propositions under the institutional principles of adjudication
are what the courts conceive to be law, and properly so.'
[44] Benson B, 'The Spontaneous
Evolution of Commercial Law' (1989) 55 Southern Economics Journal 644.
Sealy LS, Company Law and Commercial Reality, Sweet and Maxwell, London,
1984, 87-8.
[45] This is an international
version of the Delaware race to the bottom or the top which is the subject
of extensive writing in corporate law: Baysinger B and Butler HN 'Race
to the Bottom v Climb to the Top: the ALI Project and Uniformity in Corporate
Law' (1985) 10 Journal of Corporation Law, 431; Fischel D 'The Race to
the Bottom Revisited: Reflections on Recent Developments in Delaware's
Corporations Law' (1982) Northwestern University Law Review, 913; Hazen
TE, 'Corporate Directors Accountability: the Race to the Bottom; the Second
Lap' (1987) 66 North Carolina Law Review, 171; Winter RE, 'The 'Race to
the Top' Revisited: a Commentary on Eisenberg', (1989) 89 Columbia Law
Review, 1526.
[46] Dezalay notes that the three
way relationship of 'firm-state-market' has been disrupted and is now 'highly
problematic.' Dezalay Y, "Professional Competition and the Social Construction
of Transnational Regulatory Experience" in McCahery J, Picciotto S and
Scott C (ed) Corporate Control and Accountability: Changing Structures
and the Dynamics of Regulation (Oxford: Clarendon Press, 1993) 203, 206-7.
[47] Phillip Lipton claimed that
the takeovers in the United States had been ''sold' by salespeople who
were part of a 'tremendous infrastructure built up to do these transactions.'
'General Discussion following SG Winter, 'Routines, Cash Flows and Unconventional
Assets: Corporate Change in the 1980s' in M Blair (ed) The Deal Decade:
What Takeovers and Leveraged Buyouts Mean for Corporate Governance (Washington,
DC: Brookings Institution, 1993) 88, 89.
[48] Y Dezalay, 'Technological
Warfare: The Battle to Control the Mergers and Acquisitions Market in Europe'
in Y Dezalay and D Sugarman D (ed) Professional Competition and Professional
Power: Lawyers, Accountants and the Social Construction of Markets, London,
Routledge, 1995, 85-101. Parkinson outlines the cultural factors in the
European Union which have made takeovers or a market in corporate control
significant in other jurisdictions. He questions the desirability of a
law which facilitates such transactions in the European context. Parkinson
JE, Corporate Power and Responsibility: Issues in the Theory of Company
Law (Oxford: Clarendon Press, 1993) 147-151.
[49] McCahery and Picciotto argue
that the irrationality of a number of laws in this area arises partly from
the rise of multinational financial firms but also from the relationship
of the government with private sector lawyers who have the power to legitimise
particular transactions. McCahery J and Picciotto S, 'Creative Lawyering
and the Dynamics of Business Regulation' in Dezalay Y and Sugarman D, Professional
Competition and Professional Power: Lawyers, Accountants and the Social
Construction of Markets (London: Routledge, 1995) 238, 266. Dezaley makes
the point more forcibly describing how the 'mystery' of the law's authority
is deeply embedded in their false appearance of impartiality: 'It must
also be recognised that the proponents ... have a personal interest in
the matter. They are not simply analysts. They are actors in the drama.
... They wear several hats: as producers of learned discourse; as impartial
experts serving the public weal; and as 'merchants of regulatory knowledge'
if not to the highest bidder then at a very high price. Can anyone imagine
a better example of the relationship between law and economics than these
'business professionals' who personify the interweaving of market, state
and academia? They are courtiers, bowing now to politics, now to business,
now to both at once; and then to the occult mystery of the 'law', whether
social or economic. And as Thompson reminds us, that element of the mystery
is vital. The law cannot support the claims of a dominant class to rule
unless it seems to be - and actually sometimes is - impartial.' Dezalay,
above n 48, 77-8. Dezalay has also noted how these experts have 'depersonalised'
themselves and are blind to the knowledge that their information has been
produced in a market and is affected by this condition of its production.
This, however, aids the social credibility of law. Dezalay, above n 46,
203.
[50] Dezalay, note 48, 78-9, 86.
Drahos P, 'Global Law Reform and Rent-Seeking: The Case of Intellectual
Property' (1996) 7 Australian Journal of Corporate Law 45, 45. Blakeney
M 'Intellectual Property Reform in the Asia Pacific Region' (1996) 7 Australian
Journal of Corporate Law 23, 29-44.
[51] Dezalay writes: 'Key inventions
for the development of the M & A market - such as leveraged buyout
or 'poison pills' - bring into play rules of the game which are independent
of the economic field, such as those which subordinate hierarchy and prestige
to the mastery of a specific technique. This holds good for the autonomy
of these professional fields: it is at this price that this particular
category of 'men of affairs' distinguishes itself from mere go- betweens,
in order to gain the authority and social advantages which are the privilege
of the expert.' Dezalay, above n 48, 79-80. See, for another example, Sercu
P and Vanhulle C, 'Financing Instruments, Security Design, and the Efficiency
of Takeovers: A Note' (1995) International Review of Law and Economics
373-393.
[52] 'This, then, is the essence
of commercial law - the accommodation of principles, rules, practices and
documents fashioned by the world of business: the facilitation, rather
than the obstruction, of commercial development. It is part of the genius
of the common law that despite the ritual and formalism of its earlier
life it has proved able to respond to the challenges of industrial growth.
' Goode RM, Commercial Law (Harmondsworth: Penguin Books, 1982) 984
[53] Kirby M, 'Rethinking Company
Law and Practice' (1995) 5 Australian Journal of Corporations Law 176,
179 quoting Lord Wilberforce, 'Law and Economics' in Harvey PW (ed) The
Lawyer and Justice (London: Sweet & Maxwell, 1978) 73, 75.
[54] 'Another infirmity of a Commonwealth
is the immoderate greatness of a town, when it is able to furnish out of
its own circuit the number and expense of a great army; as also the great
number of corporations, which are as it were many lesser Commonwealths
in the bowels of a greater, like worms in the entrails of a natural man.
To may be added, liberty of disputing against absolute power by pretenders
to political prudence; which though bred for the most part in the lees
of the people, yet animated by false doctrines are perpetually meddling
with the fundamental laws, to the molestation of the Commonwealth, like
the little worms which physicians call ascarides.' Hobbes T, Leviathan
(Oxford: Blackwell, 1948) Chapter 29.
[55] R v Dodd (1808) 9 East 516. This appears to be amongst the first
prosecutions under the Bubble Act for 87 years. Uncertainty whether joint
stock companies were illegal at common law continued after the Bubble Act
was repealed. Andrews N, 'Comment on Corporate Law and Historical Methodology:
a Critical Perspective by Rob McQueen' (1996) 3 Canberra Law Review 15,
18.
[56] McQueen R, 'Corporate Law
and Historical Methodology: A Critical Perspective' (1996) 3 Canberra Law
Review 7.
[57] Pennington RR, 'The Genesis
of the Floating Charge' (1960) 23 Modern Law Review 631.
[58] Peter Fitzpatrick writes:
'Jurisprudence is the theorised prejudice of lawyers. Its proponents strive
to ensure the viability of law and to maintain law's authority.' Fitzpatrick
P, 'The Abstracts and Brief Chronicles of Time: Supplementing Jurisprudence'
in Peter Fitzpatrick (ed) Dangerous Supplements: Resistance and Renewal
in Jurisprudence (London: Pluto Press, 1991).
[59] Thomas Wilhelmsson, Critical
Studies in Private Law: a Treatise on Need-Rational Principles in Modern
Law (Dordrecht: Kluwer, 1992) and Peter Goodrich Reading the Law (Oxford:
Oxford University Press, 1986) 30.
[60] Maclean, above n 34. Judges
have noted this over the years: 'Needless verbosity is the mother of difficulty'
Good's case (1627) Poph 211 at 212, per cur (semble Hyde CJ, Doderidge,
Jones and Whitelock JJ); 'Words are but pictures of things, and he who
employs himself about the embellishment of language, seem to be in love
with the picture, and to negelct the life.' Lilly, Assize, 1719 p xxix;
'Most of the disputes in the world arise with words' Morgan v Jones (1773)
Lofft 160 at 176, per Lord Mansfield CJ; 'One half of the doubts in life
arise from the defects of language' Gibbons v Ogden 22 US 1 at 232 (1824)
per Johnson J; Halsbury LC 'I doubt whether any one of us has not more
than once found that human languaage is but an imperfect instrument for
the expression of human thought' Tubes Ltd v Perfecta Seamless Steel Tube
Co Ltd (1902) 20 RPC 77 at 96. In discussing the meaning of 'contributory'
under the Companies Act 1948 Roxburgh J once referred to decisions which
showed that shareholders who in fact could not be called upon to make contributions
because their shares were fully paid up could nevertheless be 'contributories.'
After citing a passage from a judgment of Turner LJ referring to 'every
person under this Act to contribute, ' Roxburgh J said 'By this I understand
the Lord Justice to mean liable, not in the events which have happened,
but in the events which might happen, in the same way in which a certain
college porch is named 'Jumbo' because the the college would have to keep
an elephant there if it had one.' Re Phoenix Oil and Transport Co Ltd [1958]
Ch 560 at 564.
[61] MacKinnon CA, 'Feminism,
Marxism, method and the state: towards feminist jurisprudence' (1983) 8
Signs 635, 638-9.
[62] Hasnas J, 'Back to the Future:
From Critical Legal Studies Forward to Legal Realism, or How Not to Miss
the Point of the Indeterminacy Argument' (1995) 45 Duke Law Journal 84,
87 quoting Belliotti RA, Justifying Law (1992) 4.
[63] Paul Carrington, the former
dean of Duke University School of Law called on critical legal studies
scholars to 'depart the law school' because of their 'nihilism.' Carrington
PD, 'of Law and the River', (1984) 34 Journal of Legal Education 227. This
led to a considerable debate: Martin, PW ''Of Law and the River' and of
Nihilism and Academic Freedom' (1985) 35 Journal of Legal Education 1,
Gordon, RW 'Robert W Gordon to Paul D Carrington' (1985) 35 Journal of
Legal Education 1, Carrington PD, Paul D Carrington to Robert W Gordon'
(1985) 35 Journal of Legal Education 9, Brest P, 'Paul Brest to Phillip
E Johnson' (1985) 35 Journal of Legal Education 16, Calabresi G, 'Guido
Calabresi to Paul D Carrington' (1985) 35 Journal of Legal Education 23
and Fiss OM, 'Owen M Fiss to Paul D Carrington' (1985) 35 Journal of Legal
Education 24.
[64] Goodrich, above n 25, 202.
At 202 note 69 he cites Derrida J, 'Force of Law: The Mystical Foundation
of Authority' (1990) 11 Cardozo Law Review 919.
[65] Fischer's and Easterbrook's
suggested that law was only binding at the option of a firm was also criticised.
Teubner quotes, with disapproval, their statement: 'Managers do not have
an ethical duty to obey regulatory laws just because those laws exist.
They must determine the importance of these laws. The penalties Congress
names for disobedience are a measure of how much it wants firms to sacrifice
in order to adhere to the rules: the idea of optimal sanctions is based
on the supposition that managers not only may, but also should violate
the rules when it is profitable to do so.' Easterbrook FH and Fischel DR,
'Antitrust Suits by Targets of Tender Offers' (1982) 80 Michigan Law Review
1155, 1177. Teubner G, Bankowska A and Adler R (trans) Law as an Autopoietic
System (Oxford: Blackwell, 1993) 79.
[66] Ibid 101 and notes 9-12 cites
the works in which these authors have expressed these views. Teubner is
critical of Wiethölder's attempt to use the principles of conflict
of laws to reduce internal conflict within the separate units of law clash
as he is not able to identify which ones. Ibid 108-9. Preuss argues that
law should mediate not only the disputes within itself but also those between
external systems in order to integrate them again into the body politic.
Ibid 111. Teubner sees that recognition of autopoiesis is already at work
in relational theories of contract. Ibid 115-22.
[67] Ibid 101.
[68] See note 39.
[69] McCahery and Picciotto, above
n 49, 247. Teubner quotes Wiethölter: 'the dominating phenomenon of
the last 10 to 15 years that the work of lawyers as socially oriented and
exercised practice has remained almost untouched by all the more fundamental
challenges facing our legal system, jurisprudence and legal doctrine.'
Wiethölter R, 'Social Science Models in Economic Law' in Daintith
T and Teubner G (ed) Contract and Organisation: Legal Analysis in Light
of Economic and Social Theory (Berlin: de Gruyter, 1986) 52, 53 quoted
in Teubner, Bankowska and Adler, above n 65, 7.
[69] Davies M, asking the law
question (Sydney: Law Book, 1994) 50. This was Bentham's persistent theme:
'[A]s well grounded a guess might be had of an astrologer for five shillings
as of counsel for twice or thrice as many guineas.' He wrote of the expression
the 'common law': 'In these two words you have a name pretended to be the
name of a really existent object: - look for any such existing object -
look for it till doomsday, no such object will be found.' Ibid.
[70] Hendrik Hartog examines laws
relating to keeping pigs in the street in New York in the early nineteenth
century. He suggests that a successful prosecution for pig keeping, which
resulted in a fine of one dollar, could be read as a single text prohibiting
pig keeping. It can also be read as a conflict between contending normative
orders. Hartog H, 'Pigs and Positivism' [1985] Wisconsin Law Review 899,
931. He emphasises the significance of custom in supporting the rights
of those who wished to keep pigs. He chooses not to choose between the
interpretations as one reflects a valued vision of the law as a single
text and the other conflicting visions of social order and the pluralism
of American law. Ibid 899-900. He sees that even with a positive statement
of law custom is important. He observes: 'A custom ... is not necessarily
a practice confirmed by judicial doctrine or statute. Legal authority may
emerge from numbers of governmental and quasi-governmental institutions
and practices. Prosecutorial discretion, bureaucratic inertia, fiscal incapacity
may all play parts as sources and justification for the practice, as may
the realisation that the action against the custom might undermine the
legitimacy or effectiveness of the political order.' Ibid 935
[71] Gray JC, The Nature and Sources
of the Law (New York: Columbia University Press,1916) 80-1.
[72] Hart HLA, The Concept of
Law (Oxford: Clarendon Press, 2nd ed, 1994) 119.
[73] Frederick Schauer said Hart
claimed that language and the rules based on it had a settled core of meaning
and a penumbra of uncertainty but that he was the victim of the Karl Llewellyn
'selection effect'. There is no incentive to dispute the indisputable so
that the cases which end up in the court are skewed sample of legal events,
the cases litigated will be from the penumbra. Schauer F, 'Introduction'
Schauer F (ed) in Law and Language (Aldershot: Dartmouth, 1993) xi, xiii.
[74] Cross R and Harris JR (ed)
Precedent in English Law (Oxford: Clarendon Press,1991) 213 Hart HLA, 'Positivism
and the Separation of Law and Morals' (1958) 71 Harvard Law Review 593.
[75] Waluchow WJ, Inclusive Legal
Positivism (Oxford: Clarendon Press, 1994) 5 quoting Hart HLA, Issues in
Contemporary Legal Philosophy, 36.
[76] Hart HLA, The Concept of
Law (Oxford: Clarendon Press, 1961) 134-5.
[77] Fuller L, 'Positivism and
Fidelity to Law - A Reply to Professor Hart' (1958) 71 Harvard Law Review
630. He did this with a response to Hart's example of the application of
a prohibition on vehicles in a park to a bicycle. Fuller showed that legal
rules could not be divorced from purpose, context and policies. Fuller
argued that if the object was a Second World War truck to be mounted as
a memorial the judge could not rely on a dictionary meaning but would be
forced to consider the purpose of the rule. Schauer F, Playing by the Rules
- A Philosophical Examination of Rule-Based Decision Making in Law and
in Life (Oxford, Clarendon Press, 1991) 212-5 has sought to reconcile Hart's
core meaning with the justification for the rule.
[78] Waluchow, above n 75, 243.
'Wittgenstein's advice ... is peculiarly relevant to the anlysis of legal
and political terms. Considering the definition of 'game' he said, 'Don't
say there must be something common or they would be called 'games', but
look and see whether there is anyhting common to all. For if you look at
them you will see anything common to all but similarities, relationships,
and a whole series at that.' Hart, above n 72, 234, quoting Wittgenstein,
Philosophical Investigations, i, 66. But see Zapf C and Moglen E, 'Linguistic
Indeterminacy and the Rule of Law: On the Perils of Misunderstanding Wittgenstein'
(1996) 84 Georgetown Law Journal 485, 489, 518.
[79] 'The clear cases are those
in which there is general agreement that they fall within the scope of
a rule, and it is tempting to ascribe such agreement simply to the fact
that there are necessarily such agreements in the shared conventions of
language. But this would be an oversimplification because it does not allow
for the special conventions of the legal use of words, which may differ
from their common use, or for the way in which the meaning of words may
be clearly controlled by reference to the purpose of a statutory enactment
which may itself be either explicitly stated or generally agreed.' Waluchow,
above n 75, 270 quoting Hart HLA, 'Problems of the Philosophy of Law',
271.
[80] 'It is of crucial importance
that cases for decision do not arise in a vacuum but in the course of the
operation of a working body of rules, an operation in which a multiplicity
of diverse considerations are continuously recognized as good reasons for
a decision. These include a wide variety of individual and social interests,
social and political aims, and standards of morality and justice; and they
may be formulated in general terms as principals, policies and standards.
In some cases only one such consideration may be relevant, and it may determine
a decision as unambiguously as a determinate legal rule.' Waluchow, above
n 75, 270 quoting Hart HLA, 'Problems of the Philosophy of Law', 271.
[81] George RP, 'Preface' in George
RP (ed) The Autonomy of Law: Essays on Legal Positivism (Oxford: Clarendon
Press, 1996) vi, vi. This makes it difficult to distinguish the positivist
from the realist. Jori M, 'Introduction' in Jori M (ed) Legal Positivism
(Aldershot: Dartmouth, 1992) xvii-xx. Indeed Greenawalt has 'failed to
identify any thesis of legal positivism that both is plausible and that
marks it off distinctively from various positions that are advanced as
being alternatives to it.' Greenawalt K, 'Too Thin and Too Rich:Distinguishing
Features of Legal Positivism' in George, this note, 1, 19. He identifies
a concern with law 'as a social fact' as the main distinguishing feature
but this appears to be a feature many legal theories could claim. Ibid.
[82] Fuller LL, 'The Case of the
Speluncean explorers' (1949) 62 Harvard Law Review 616. This describes
a fictional case in which explorers, trapped in a cave, select, using a
dice, one of themselves to die. A fictional Supreme Court considers the
moral content of law in their appeal against the death penalty following
their conviction for murder.
83 Fuller LL, The Law in Quest of Itself (Chicago: The Foundation Press,
1940) 60.
[84] Fuller wrote: 'in a period
when major readjustments in our economic and social order have become necessary
... Since many of these necessary changes have to be brought about by legislative
and administrative decree, the power of governmental fiat is being stretched
to the utmost .... It would seem that the present is a time when our social
structure requires to be held together by a cement firmer than that supplied
by the abstract principle for respect for law as such.' Fuller LL, The
Law in Quest of Itself (Chicago: The Foundation Press, 1940) 115-16. See
also Fuller LL, The Morality of Law (New Haven: Yale University Press,
rev ed, 1969).
[85] Fuller observed that in 'a
sufficiently homogenous society certain 'values' will develop automatically
and without anyone intending or directing their development. In such a
society it is assumed that the legal rules developed and enforced by courts
will reflect these prevailing 'values'.' Fuller LL, 'The Forms and Limits
of Adjudication' (1978) 92 Harvard Law Review 353, 378. See also Frankfurter
F, 'Some Reflections on the Reading of Statutes' (1947) 47 Columbia Law
Review 527, 530.
[86] The most relevant parts of
Dworkin's work are: Dworkin R, Taking Rights Seriously (London: Duckworth,
new imp with reply to critics, 1981) 81-130, particularly 110-123. Dworkin
RM, Law's Empire (Cambridge, Mass: Harvard University Press, 1986) 24-6,
120-35, 149-63, 240-50 and 400-4. An earlier statement of his views can
be found in debate with Wasserstrom. Wasserstrom discusses criticisms of
the deductive theory showing that many stem from a misunderstanding of
logic. The judicial process is a process of justification and not discovery.
This should be a two level process, ie, the decision deduced from the most
desirable rule. Wasserstrom RA, The Judicial Decision: Toward a Theory
of Legal Justification (Stanford: Stanford University Press, 1961) Chapters
2, 3 and 7. This is criticised by Dworkin on the ground that the assumptions
underlying Wasserstom's thesis make it valueless. These are said to be
that there is some unique goal or function which a legal system should
serve, that judicial decision should involve calculation of the sort discussed,
and the absence of legislative rules. Dworkin RA, 'Does Law Have a Function?
A Comment on a Two Level Theory of Decision' (1964) Yale Law Journal 640.
[87] Davies, above n 68, 52-4.
Cotterell, above n 23. Gray had also anticipated this arguing that ethical
principles are sought out and used by judges. 'When a case comes before
a court for decision there may be no statute, no judicial precedent, no
professional opinion, no custom, bearing on the question involved, and
yet the court must decide the case somehow.' He goes on to write: 'a source
of the law, not the only source, but a source and a main source, is found
in the principles of ethics. These principles, therefore, are legitimately
a part of Jurisprudence.' Gray, above n 71, 292.
[88] This appears to follow Frankfurter
and Hart: 'As governmental problems become more and not less complicated,
as the dislocating impact of technological advances become more powerful
and less imperceptible, as the forces of economic interdependence demand
more and more determination and ingenuity for the maintenance of a simpler
but perhaps more socially satisfying society, the deep wisdom of the Court's
self-restraint against undue or premature intervention, in what are ultimately
political controversies, becomes the deepest wisdom for our times.' Frankfurter
F and Hart HM, 'The Business of the Supreme Court at October Term, 1934'
(1935) 49 Harvard Law Review 68, 107.
[89] Pound R, 'Survey of the Conference
Problems' (1940) 14 University of Cincinatti Law Review 324, 330. Dickinson,
for example, wrote of legal principles representing basic moral beliefs.
Dickinson J, 'The Law Behind Law' (1929) 29 Columbia Law Review 285, 296.
Posner detects a resemblance to Cardozo's use of principle. Posner RA,
Cardozo: A Study in Reputation (Chicago: Chicago University Press, 1990)
29.
[90] This conception, Dworkin
writes, 'insists that, so far as is possible, the power of the state should
never be exercised against individual citizens except in accordance with
rules explicitly set out in a public rule book available to all. The government
as well as ordinary citizens must play by these public rules until they
are changed, in accordance with further rules about how they are to be
changed, which are also set out in the rule book.' Dworkin R, Political
Judges and the Rule of Law: Maccabean Lecture in Jurisprudence 1978 (London:
British Academy and Oxford University Press, 1978) 261-2. Dworkin notes
that he notes that English speaking lawyers are tricked into this, according
to Pound, because it uses the same word for 'a law' and 'the law' whilst
French and German maintain the distinction with 'loi' and 'droit' and 'Gesetz'
and 'Recht'. Dworkin, Taking Rights Seriously , above n 86, 38 He criticises
Hart for holding this belief. Ibid 292-3. Dworkin RM, 'Is Law a System
of Rules?' in Dworkin RM (ed) The Philosophy of Law (Oxford: Oxford University
Press, 1977) 38. Dworkin, Law's Empire, above n 86, 116-7.
[91] 'It assumes that citizens
have moral rights and duties with respect to one another, and political
rights against the state as a whole. It insists that these moral and political
rights be recognized in positive law, so that they may be enforced upon
the demand of individual citizens through courts or other judicial institutions
of a familar type, so far as this is practicable. The rule of law on this
conception is the ideal of rule by an accurate public conception of individual
rights. It does not distinguish, as the rule-book conception does, between
the rule of law and substantive justice; on the contrary it requires, as
part of the ideal of law, that the rules in the rule book capture and enforce
moral rights.' Dworkin, above n 90, 262.
[92] In Dickinson's model conflicting
principles carried the answer within them as they 'have a significant habit
of travelling in pairs of opposites.' For Dickinson the level of indeterminacy
this produced meant that such principles could not be law. He wrote: 'Each
is a general expression of the fact that the law will protect a certain
kind of human interest; but, the conditions of human life and association
being what they are, every such interest if carried beyond a certain point
is bound to come into conflict with some other interest or interests of
a kind which the law also protects - and will thus come into conflict with
a competing principle of equal validity.' Dickinson J, 'The Law Behind
Law' (1929) 29 Columbia Law Review 285, 298.
[93] If they were not the principle
that people should not be punished or deprived under retrospectively made
laws would be violated. Dworkin, Taking Rights Seriously, above n 86, 30.
It would also mean that there is no guarantee of, or promotion of, expectations
based on previous decisions. Ibid 128
[94] Rawls wrote, in 1951, that
ethics involved the attempt to reasonable principles which would produce
the right result. The use of these principles would mean that 'if any competent
man were to apply them intelligently and consistently to the same cases
under review, his judgements, made systematically nonintuititive by the
explicit and conscious use of the principles, would be ... identical ,
case by case, with the considered judgments of ... competent judges.'Rawls
J, 'Outline of a Decision Procedure for Ethics' (1951) 60 Philosophical
Review 177, 178, 184.
[95] Dworkin, Taking Rights Seriously,
above n 86, 293
[96] Paterson A, The Law Lords
(London: Macmillan, 1982) 2, 123, 190-1, 194-195. This view is confirmed
in the Australian context by Mason J in Sturgess G and Chubb P, Judging
the World: Law and Politics in the World's Leading Courts (Butterworths:
Sydney, 1988) 346 and Sir Ninian Stephen's comments. Ibid 3. Seidman states:
'There is a difference between 'clear' and 'trouble' cases. In the former,
there is a rule at hand and the facts fall within the inner core of the
categories specified by the rule; in the latter one or other of these conditions
is lacking. The judge's tasks differ too. In 'clear' cases she is applying
a pre-existing rule; in trouble cases she makes the rule ex post facto.'
Seidman RB, 'The judicial process reconsidered in the light of role theory'
(1969) 32 Modern Law Review 516. Lord Scarman states that judges have much
freedom of choice in the way in which they give their decisions. This lays
a great responsibility on them and makes qualifications and processes of
appointment important.' Scarman LG, 'The English Judge' (1967) 30 Modern
Law Review 1.
[97] He does so by likening it
to a literary dispute in which the answer 'no-right-answer' is one of a
number of contenders as a possible answer, to be preferred to others, to
a question about a fictional character for which there is no information.
No answer can be right or wrong except by agreement between the critics
involved. So it is in law. Dworkin, Taking Rights Seriously , above n 86,
331-2. Unless it is conceded that even in hard cases the decision is correct
this introduces a new aspect to legal theory that requires all reasonable
lawyers to be satisfied the decision is right before it is accepted as
law. In addition we gain through the attempt in aspiring to have adjudication
using the correct principle. Ibid 338. This was a strong feature of the
declaratory system. As Llewellyn observes: 'Even judges who know with their
minds that varying answers would be legally permissible will be found with
a strong urge to feel that one among them must be the right one.' Llewellyn
KL, The Common Law Tradition: Deciding Appeals (Boston: Little, Brown,
1960) 24.
[98] Bell J, Policy Arguments
in Judicial Decisions (Oxford: Clarendon Press, 1983) 'Chapter VIII The
Rights Model', 204-225.
[99] Demott observed that criteria
such as good faith were so loosely defined that the court had considerable
discretion. She accepted the literary metaphor to the extent that the cases
had to be read in a nuanced way having regard to the court's categorising
the party's behaviour as 'odd', 'puzzling' or 'troublesome' which appear
to be gratuitous but which prevent the decision being used to generate
definite rules. She finds that Dworkin's analogy of common law, as opposed
to equity, cannot explain these decisions. Novels have plots and conclusions
which were missing here so hence her preference for the cautionary story.
DeMott DA, 'Puzzles and parables: defining good faith in the MBO context'
(1990) 25Wake Forest Law Review 15, 36.
[100] Coase RH, 'The New Institutional
Economics' (1984) Journal of Institutional and Theoretical Economics 229,
230. Coase used the expression 'waiting for a theory or a fire.' He was
referring to early twentieth century institutional economics.
[101] Minda, above n 15, 287-8
note 6. He refers to Easterbrook FH, ''Method, Result, and Authority: A
Reply' (1985) 98 Harvard Law Review 622 and Kitsch EW, 'The Intellectual
Foundations of Law and Economic'', (1983) 33 Journal of Legal Education
184. Coase claims that the ambiguity has been brought about by the second
generation in law and economics turning to an 'eclectic jurisprudence'
which includes postmodernism. Kitch EW, 'The Intellectual Foundations of
'Law and Economics'' (1983) 33 Journal of Legal Education 184.
[102] Holmes, above n 1. Holmes
also observed that 'every lawyer ought to seek an understanding of economics.'
[103] Clark JM, Social Control
and Business (Chicago: University of Chicago Press, 1926) Clark defined
'control' as 'primarily, coercion: orders backed by an irrestible power
... But there are other less obvious ways of exercising control. In a broad
sense, you can control me if you can make me do what you want, no matter
what motive you use.' Ibid 6. Clark acknowledged the contribution of Karl
Llewellyn. Ibid xv. Robert Lee Hale had previously recognised that economic
power conferred a power of coercion similar to that of the state. Duxbury,
above n 39, 110-11. Hale had been inspired by Thorstein Veblen's The Theory
of Business Enterprise (New York: Mentor, 1958) first published in 1904).
[104] Llewellyn KN, 'The Effect
of Legal Institutions Upon Economics' (1925) 15 American Economic Review
665, 672.
[105] Ibid 678.
[106] Veblen observed: 'The
lawyer is exclusively occupied with the details of predatory fraud, either
in achieving or checkmating chicanery, and success in the profession is
therefore accepted as marking a large endowment of that barbarian astuteness
which has always commanded men's respect and fear.' Verblen T, The Theory
of the Leisure Class: An Economic Study of Institutions (New York: Mentor,
1953) 156. This was taken up by Fred Rodell: 'In tribal times, there were
the medicine men. In the Middle Ages, there were the priests. Today there
are the lawyers. For every age, a group of bright boys, learned in their
trades and jealous of their learning, who blend technical competence with
plain and fancy hocus-pocus to make themselves masters of their fellow
men. For every age, a pseudo-intellectual autocracy, guarding the tricks
of its trade from the uninitiated, and running, after its own pattern,
the civilization of the day.' Fred Rodell, Woe Unto You, Lawyers! (New
York: Berkeley, 1980) 1.
[107] See the Non-Posnerian
Law and Economics Symposium (1989) 12 Hamline Law Review 193.
[108] Hayek FA, Law, Legislation
and Liberty, Volume 1, Rules and Order (London: Routledge & Kegan Paul,
1973) 118-19. It repeats the emphasis in the Austrian school of economics
on free running and evolutionary social processes which result from 'non-reflected
action'. Marginson S, The Freemarket: A Study of Hayek, Friedman and Buchanan
and Their Effects on the Public Good (Sydney: Public Sector Research Centre,
University of New South Wales, 1992) 23-8.
[109] Hayek, above n 108, 135.
Hayek's description of the common law avoids the political and moral issues
in judicial decision making. According to Hayek the judge cannot 'will'
a particular result but he concedes that the experience of the judge matters.
He agrees that the logic of the law is not that of the syllogism but of
the situation. He quoted, with apparent approval, one of Holmes' observations
which became a foundational statement of realists: 'The life of the law
has not been logic, it has been experience. The felt necessities of the
time, the prevalent moral and political theories, institutions of public
policy, avowed or unconscious, even the prejudices which judges share with
their fellow-men, have a good more to do than syllogisms in determining
the rules by which men should be governed.' Ibid 106 and note 14 citing
Holmes OW, Jr, The Common Law, (New York, 1963 7). There are other problems
with Hayek's model of the common law. He argues that it is a system of
law which promotes freedom more than legislation as it is a spontaneous
order free of human will. He condemns conservatives for not welcoming the
further free growth of social institutions Hayek FA, The Constitution of
Liberty (Chicago, Chicago University Press, 1960) 398. But this does not
explain why he does not welcome into this evolutionary development the
constructive rationalism present in European law for four centuries or
the expanded role of the state or democratic processes which have developed
over the past 200 years. Gamble A, Hayek: The Iron Cage of Liberty (Oxford,
Oxford University Press, 1996) 185, 190. Legislation, which results from
successive parliaments and negotiated processes could also be seen as an
undirected spontaneous order.
[110] Hoyt wrote: 'The common
law is more likely to follow a formal rule after the reasons for its adoption
has passed, to allow vested interests to reap a social income after their
function has disappeared, to repudiate new movements as transient because
they conflict with fundamental principles, and to enforce a standard of
morality from which this age has departed.' Hoyt H, 'The Economic Function
of the Common Law' (1918) 26 Journal of Political Economy 167, 179.
[111] Julius Stone, The Province
and Function of Law: Law as Logic, Justice and Social Control (Sydney:
Associated General Publications) 1946, 717 and note 55. Stone resolved
this issue in his suggestion that the judge's 'ought' appears to the reader
as the judge's 'is'.
[112] JK Galbraith wrote of
the emerging market economics, which he believed divorced economics from
judgment, that 'it achieved considerably more academic respectability from
an energetic group of evangelists who gathered, along with von Hayek, at
the University of Chicago with academic outriders in other centers.' Galbraith
JK, The Affluent Society (Boston, Houghton Mifflin, 3rd ed, 1976) xi, 122.
In fact a neo-classical approach to economics already prevailed at Chicago
before Hayek went there. Duxbury, above n 39, 330-9.
[113] Posner wrote:'the economic
theory of law seems, to this biased observer anyway, the best positive
theory of law extant. It is true that anthropologists, sociologists, psychologists,
political scientists, and other social scientists besides economists also
do positive analysis of the legal system. But their work is thus far insufficiently
rich in theoretical and empirical content to afford serious competition
to economists.' Posner R, 'The Economic Approach to Law' (1975) 53 Texas
Law Review 757, 774.
[114] Stigler GS, The Economist
as Preacher and Other Essays (Chicago: Chicago University Press, 1982)
22.
115 Demetsz H, 'Social Responsibility in the Enterprise Economy' (1978)
10 Southewestern University Law Review 1, 1.
[116] Coleman JL and Kraus J,
'Rethinking the Theory of Legal Rights' (1986) 95 Yale Law Journal 1335.
Easterbrook FH, 'Method, Result and Authority: A Reply' (1985) 98 Harvard
Law Review 622 argued that 'scacity', 'choice', 'self-interested conduct'
are the 'facts of life' which judges must sometimes respond to in legal
decision making. McEwin RI, 'Liberty, Law and Economics' in Ratnapala S
and Moens GA (ed) Jurisprudence of Liberty (Butterworths: Sydney, 1996)
165, 167.
[117] Gordon RW, 'Introduction:
Holmes' Shadow' in RW Gordon ed, The Legacy of Oliver Wendell Holmes Jr
(Edinburgh: Edinburgh University Press, 1992) 1, 6.
[118] The process of legislation
is the reverse as it is a deal between congress and interest groups and
the legislation is a product sold into a market full of free riders. Posner
argues that if judges do not decide according to economic efficiently criteria
parties will, by contract, avoid the courts use contract as a form of private
legislation. Benson, above n 44, 644-61. Benson basically argues that custom
always preceded law in the adjudication of commercial disputes, partly
because business frequently transcends national boundaries and partly because
business practice evolves too rapidly for legislation to keep up with.
He also discusses commercial law as a stimulus to, and product of rent-seeking,
by the legal profession and business's attempt to displace onto the public
costs they would otherwise have to assume themselves.
[119] Dworkin R, 'Why Efficiency?
A Response to Professors Calabresi and Posner (1980) 8 Hofstra Law Review
563, 563-4. Samuels WJ and Mercuro N, 'Posnerian law and Economics on the
Bench' (1984) 4 International Review of Law and Economics 107, 123. Kennedy
D, 'Form and Substance in Private Law Adjudication' (1976) 89 Harvard Law
Review 1685, 1763.
[120] Cooter RD, 'Law and the
Imperialism of Economics: An Introduction to the Economic Analysis of Law
and a Review of the Major Books' (1982) 29 UCLA Law Review 1260, 1263.
[121] Summers RS, 'The Future
of Economics in Legal Education: Limits and Constraints' (1983) 33 Journal
of Legal Education 337, 339.
[122] Kornhauser LA, 'An Economic
Perspective on Stare Decisis' (1989) 65 Chicago-Kent Law Review 63, 63.
[123] Buchanan JM, 'Good Economics
- Bad Law' (1974) 60 Virginia Law Review 483, 490-2.
[124] Wealth maximisation occurs
when goods and services are placed in the hands of those who value them
the most. This is determined by a willingness to pay more money or its
equivalent to have the goods. A distribution of goods is Pareto efficient
if no change can be made that leaves no one worse off and at least one
person better off, Dworkin, A Matter of Principle, above n 86, 237-8, 240.
[125] Coase R, 'Coase on Posner
on Coase' (1993) 149 Journal of Institutional and Theoretical Economics
96. Posner has replied to Coase's criticism suggesting that Coase's best
work was done some time ago. Posner RA, Overcoming Law (Cambridge, Mass:
Harvard University Press, 1995) 406-43. Posner's concepts were criticised
by another Noble laureate in economics, for his work on public choice theory,
James Buchanan from the Virginia school of economics. Buchanan, above n
123, 483. This is a review of the first edition of Posner's Economic Analysis
of Law. Campbell D, 'Ayres versus Coase: An Attempt to Recover the Issue
of Equality in Law and Economics' (1994) 21 Law and Society 434. Campbell
notes that the price theories of Coase dominate law and economics. This
neo-classical theory neglects the work of institutionalist economists.
The theorists who followed Veblen, amongst whom is Ayres, have given greater
emphasis to equality and egalitarian income distribution.
[126] Posner argues that a judge
will follow a precedent as it projects a judge's influence more effectively.
If a judge does not follow precedent other judges of judges will not be
criticised for failing to follow the original judge's decision. So the
chance of the present judge's decisions not being followed are increased.
This diminishes the judge's influence.Because of judicial independence,
which does not reward or punish judges in market terms for their decisions,
there is no incentive for judges to do so apart from criticism which, he
acknowledges, is a weak force but one to which judges are particularly
susceptible. He acknowledges that there is a free rider problem. A judge
may not follow a precedent and the criticism may be less than the gains.
The appellate process deals with this and the final court of appeal, because
of the desire to project influence, will adhere to precedent. Posner RA,
Economic Analysis of Law (Boston: Little, Brown & Co, 4th ed, 1992),
'Chapter 20, The Process of Legal Rule Making' 539-48.
[127] Ibid 368.
[128] Contract law economises
on transaction costs by supplying such standard contract terms that parties
would otherwise have to adopt by express agreement. Posner concedes that
even in a context where it is possible to contract, like workers' safety,it
is not likely to happen. Ibid 369-72.
[129] This can be traced back
to Williamson who had dissolved the company into a nexus of exchange relations
amongst the holders of various corporate resources. The general outline
of this dissolution is in: Williamson O, Markets and Hierachies: Analysis
and Anti-Trust Implications (New York: Free Press) 1975 and The Economic
Institutions of Capitalism: Firms, Markets, Relational Contracting (New
York: Free Press, 1985).
[130] 'In direct opposition
to the ... doctrine of strict property rights is the view, apparently held
by the great corporation lawyers and by certain students of the field,
that corporate development has created a new set of relationships, giving
to the groups in control powers which are absolute and not limited by any
implied obligation with respect to their use. This logic leads to drastic
conclusions. For instance, if, by reason of these new relationships, the
men in control of a corporation can operate it in their own interests,
and can divert a portion of the asset fund of income to their uses, such
is their privilege. Under this view, since the new powers have been acquired
on a quasi contract basis, the security holders have agreed in advance
to any losses which they may suffer by reason of such use.' Berle AA and
Means GC, The Modern Corporation and Private Property (New York: Macmillan,
1932) 354.
[131] One of the consequences
of this corrosive treatment is that the 'corporate and collective elements
of the organisation are ... systematically underexposed, if not totally
eclipsed.' It privileges the two concepts which underlie contract, exchange
and competition, at the expense of a third, cooperation, which also appears
to be a significant issue in the corporate structure and governance. Teubner,
Bankowska and Adler, above n 65, 129. It also suggests that the basic unit
in the company is the market transaction when it is the decision. The corporate
decision points to expectations within the company and the interest of
the company whereas the market points to price and individual self-interest.
Ibid 130.
[132] Teubner, Bankowska and
Adler, above n 65, 131.
[133] Posner prefers an analogy
from TS Eliot of how a new work of sculpture in a sculpture park changes
the way that we see other sculptures. We read one writer in a different
way after another writer has written. Posner, above n 22, 260.
[134] Ibid 384-7, 464-7. Posner,
above n 126, 444-67.
[135] Coase RH, 'The Nature
of the Firm' in Coase RH, The Firm, the Market and the Law (Chicago: University
of Chicago Press, 1988) 33, 43. Coase wrote: 'The main reason why it is
profitable to establish a firm would seem to be there is a cost in using
the price mechanism. The most obvious cost of 'organizing' production through
the price mechanism is that of discovering what the relevant prices are.
This cost may be reduced but it will not be eliminated by the emergence
of specialists who will sell this information. The costs of negotiating
and concluding a separate contract for each exchange transaction on a market
must also be taken into account.' Ibid 38-9. The influence of this article
is discussed in: Coase RH, 'The Nature of the Firm: Influence' (1988) 4
Journal of law, Economics, and Organisation 33 and Bratton WW, 'The New
Economic Theory of the Firm: Critical Perspectives from History' (1989)
41 Stanford Law Review 1471, 1477-8.
[136] Coase RH, 'The Problem
of Social Cost' in Coase RH, The Firm, the Market and the Law (Chicago:
University of Chicago Press, 1988) 95. For an argument that this principle
should be used as a legal principle see White B, 'Coase and the Courts:
Economics for the Common Man' (1987) 72 Iowa Law Review 577.
[137] Manne's assumption is
that this market disciplined managers to be efficient. Manne HG, 'Mergers
and the Market for Corporate Control' (1965) 73 Journal of Political Economy
110, at 113. Navin and Sears show how a market developed in public company
shares with little information about the companies being disclosed. Navin
TR and Sears MV, 'The Rise of a Market for Industrial Securities, 1887-1902'
(1955) 29 Business History Review 105.
[138] R Coase, 'The Problem
of Social Cost' (1960) 3 Journal of Law and Economics 1, at 97-104. J Coffee,
'Regulating the Market for Corporate Control: A Critical Assessment of
the Tender Offer's Role in Corporate Governance' (1984) 84 Columbia Law
Review 1145, at 1163-6. The Chancery Court of Delaware showed one reaction
outside the academic community when it observed: 'But just as the Constitution
does not enshrine Mr Herbert Spencer's social statics, neither does the
common law of directors' duties elevate the theory of a single, efficient
capital market to the dignity of a sacred text.' Paramount Communications,
Inc v Time, Inc 1989 Fed Sec L Rep (CCH) ¶ 94, 514 at 93,277 (Del
Ch July 14, 1989).
[139] Coffee, above n 138, 1163-1166.
[140] Easterbrook F and Fischel
DR, 'The Proper Role of a Target's Management in Responding to a Tender
Offer' (1981) 94 Harvard Law Review 1161, at 1174. Fischel DR, 'The Corporate
Governance Movement' (1982) 35 Vanderbilt Law Review 1259, at 1264.
[141] JR Brown, 'In Defence
of Management Buyouts' (1990) 65 Tulane Law Review 57, at 60.
[142] Smith wrote: 'The directors
of such [joint-stock] companies, however, being the managers rather of
other people's money than of their own, it cannot well be expected, that
they should watch over it with the same anxious vigilance with which the
partners in a private copartnery frequently watch over their own ... Negligence
and profusion, therefore, mus always prevail, more or less, in the management
of the affairs of such a company.' A Smith, An Inquiry Into The Nature
And Causes Of The Wealth Of Nations, Printed for A Strahan & T Cadell,
London, 6th ed, 1791, Book II, p 233. Parkinson points out that Marx, Alfred
Marshall, and Keynes voiced similar views. Parkinson, above n 48, 46.
[143] Alchian A and Demsetz
H, 'Production, Information Costs, and Economic Organisation' (1972) 62
American Economic Review 777. Dallas LL, 'Two Models of Corporate Governance:
Beyond Berle and Means' (1988) 22 University of Michigan Journal of Law
Reform 19, at 53-68. Fama EF and Jensen MC, 'Separation of Ownership and
Control' (1983) 26 Journal of Law and Economics 301, 302-3.
[144] Williamson emphasises
the uncertainty of the long term relations in the company which cannot
be contracted about in advance. Williamson, The Economic Institutions of
Capitalism, above n 129, 52-61.
[145] Ibid, at 61, 65-67, 83-84.
Young JD, 'Federal Income Tax Law: Who Really Bought RJR Nabisco?' (1991)
25 Wake Forest Law Review 141, at 155-6. Young discusses the effect of
this disagreement in the context of taxation policy.
[146] Brown, above n 141, 65-7,
83-4.
[147] Easterbrook and Fischel,
above n 140, 1164, 1177-80. Fischel, above n 140, 1264.
[148] F Easterbrook and D Fischel,
''Auctions and Sunk Costs in Tender Offers' (1982) 35 Standford Law Review
1, 12.
[149] Brown, above n 141, 92-93,
notes 103 and 104. Brown refers to the writers who divide on this issue.
Coffee, supra, at 1156.
[150] Brown, above n 141, 95.
[151] LA Bebchuk, 'The Case
for Facilitating Competing Tender Offers' (1982) 95 Harvard Law Review
1028, at 1033. G Andre, 'Tender Offers for Corporate Control: A Critical
Analysis and Proposals for Reform' (1987) 12 Delaware Journal of Corporate
Law 865, 874-75.
[152] L Johnson, 'The Eventual
Clash Between Judicial and Legislative Notions of the Target Management
Conduct' (1988) 14 Journal of Corporate Law 35, 87-8. C Goforth, 'Proxy
Reform as a Means of Increasing Shareholder Participation in Corporate
Governance: Too Little, But Not Too Late' (1994) 43 American University
Law Review 379, at 419-20. Coffee, supra, n 56, at 1166, 1212.
[153] Johnson, above n 152,
87-8.
[154] 'Why Too Many Mergers
Miss the Mark' Economist 4 January 1997, 59-60. J Kay, 'Corporate Strategy
and Corporate Accountability', in Capital Markets and Corporate Governance,
eds D Dimsdale and M Prevezer, Clarendon Press, Oxford, 1994, 50, p 50-1.
[155] Barnett RE, 'Introduction:
A New Era of Law and Economics' (1989) 65 Chicago-Kent Law Review 3. See
also 'Symposium: The Future of Law and Economics' (1992) 20 Hofstra Law
Review 757-1137 and 'Symposium: Post-Chicago Law and Economics' (1989)
65 Chicago-Kent Law Review 3-191.
[156] Posner, above n 126, 426-43.
Institutional economics has challenged the theses of neoclassical economics
of rationality, optimality, and inexoreable progress to greater progress
and efficiency through competition. Jones SRH, 'Review: Economic Revolution:
An Enquiry into the Foundations of New Institutional Economics (London:
Routledge, 1995)' (1996) 38 Business History 133, 133. New institutional
economics is now providing alternative explanations about the nature of
the firm. Lee CH, 'Review: Richard N Langlois and Paul L Robertson, Firms,
Markets and Economic Change: A Dynamic Theory of Business Institutions
(London: Routedge, 1995) (1996) 38 Business History 127-8.Coleman JL, 'Afterword:
The Rational Choice Approach to Legal Rules' (1989) 65 Chicago-Kent Law
Review 177, 188. Transaction costs have been described by Coleman as: 'First,
identify the standard or typical context within which the problem is embedded.
Second, identify the factors in the environment that contribute to uncertainty
and those factors which constitute the pool of resources upon which parties
in those circumstances might typically draw. Third, see whether the central
problem which the legal rules addresses (given the context) is one of coordination,
division or defection uncertainty.' Ibid 189. Others have turned from law
and economics to look at other ways of explaining law-making and law reform
by institutions. Romano R, 'Metapolitics and Corporate Law Reform' (1984)
36 Standford Law Review 923. Others have sought to use it to defend different,
non-market values. Rose-Ackerman S, 'Progressive Law and Economics - and
the New Administrative Law' (1988) 98 Yale Law Journal 341.
[157] Ulen, 'Law and Economics:
Settled Issues and Open Questions' in Mercuro N (ed) Law and Economics
(Dordrecht: Kluwer Academic, 1989) 224-5.
[158] Taylor C, The Malaise
of Modernity (Concord: Anansi, 1991) 4-8.
[159] Fuller LL, 'American Legal
Realism' (1934) 82 University of Pennsylvania Law Review 429, 443
[160] Posner, above n 22, 26-7.
Dewey asserted: 'that law was best seen as an empirical social science.'
Schlegel, above n 22, 8.
[161] Olivercrona K, Law as
Fact (London: Stevens & Sons, 1971) 168-85. Rorty R, Objectivity, Relativism,
and Truth: Philosophical Papers Volume 1 (Cambridge: Cambridge University
Press, 1991) 2-12.
[162] See above n 23.
[163] See above n 24.
[164] 244 US 205, 222. Holmes
J dissenting.
[165] 244 US 205, 221. Holmes
J dissenting.
[166] 244 US 205, 221. Holmes
J dissenting. Holmes, above n 11, 583.
[167] Cardozo, above n 18, 21.
[168] Twining W, Karl Llewellyn
and the Realist Movement (London: Weidenfeld and Nicolson 1973) 382. Llewellyn
also described realism as: 'realism is a mass of trends in legal thinking
... recognition of law as a means; recognition of change in society that
may call for a change in law ... a distrust of the received set of rules
and concepts as adequate indications of what is happening in courts. ...
Uncertainty in the action of [appellate courts] is one main problem: to
find the why of it; to find means to produce it, where it needs reduction;
to find where it needs reduction, where expansion ... of the life which
lies before and behind 'law''. Llewellyn KL, Jurisprudence: Realism in
Theory and Practice (Boston: Little, Brown, 1962) 68-9. This was not just
part of an external description of the law. Llewellyn argued that judges
should also look beyond legal language and interpretation to behavioural
matters 'the area of contact, of interaction, between official regulatory
behaviour and the behaviour of those affecting or affected by official
regulatory behaviour.' Llewellyn K, 'A Realistic Jurisprudence - The Next
Step' (1930) 30 Columbia Law Review 431, 464. Oliphant and Hewitt, for
example, criticised legal scholarship as tending 'more and more to neglect
how courts decide cases and more and more to consider what they say about
why they decide as they do, which, after all, is stating the same thing
in the same way.' Oliphant H and Hewitt A, 'Introduction', in Jaques Rueff,
From the Physical to the Social Sciences: Introduction to a Study of Economic
and Ethical Theory (Baltimore: Johns Hopkins Press, 1929) xxvi-xxviii.
[169] Pound R, 'Review of WW
Cook, Cases and Other Authorities on Equity' (1923) 37 Harvard Law Review
396, 397. Pound R, 'The Call for Realist Jurisprudence' (1931) 44 Harvard
Law Review 697, 706-7. Hull NEH, 'Some Realism about the Llewellyn-Pound
Exchange over Realism: The Newly Uncovered Private Correspondence, 1927-1931'
[1987] Wisconsin Law Review 921.
[170] Cotterell, above n 23,
188. See Llewellyn, above n 96, 237-239.
[171] Llewellyn, above n 168,
68 and note 69.
[172] Teubner, Bankowska and
Adler, above n 65, 127.
[173] Berle and Means, above
n 130, 339.
[174] Chamberlin E, The Theory
of Monopolistic Competition (Cambridge: Harvard University Press, 1933)
71-4.
[175] Duxbury, above n 16, 137.
[176] Hart, above n 14, 983.
Frank and Cardozo who were also 'fact' sceptics. The focus on rules by
superior courts blinded observers to their concentration on facts. The
finding of facts was unscientific and unpredictable even before an appeal
court got to them. Cotterell, above n 23, 188
[177] See above n 15.
[178] At one extreme is the
nihilism of Frank that was seen again in critical studies. His best known
work, Law and the Modern Mind, was produced as he undertook extensive psychoanalysis
as he worked as a Wall Street corporate lawyer. He was to become a member
of the Securities and Exchange Commission and its chair in 1939. Duxbury,
above n 15, 176. Frank claimed that judges began with vaguely formed conclusions
as a result of their personal experiences in the hearing which they then
found precedents to support. Frank wrote that: 'Once trapped by the belief
that the announced rules are the paramount thing in law, and that uniformity
and certainty are of major importance and are to be procured by uniformity
and certainty in the phrasing of rules, a judge is likely to be affected
... by consideration of the possible, yet scarcely imaginable, bad effect
of a just opinion in the instant case ... He then refuses to do justice
in the case on trial because he fears that 'hard cases make bad laws.'
And thus arises what may aptly be called 'injustice according to law'.
Such justice is particularly tragic because it is based on a hope of doomed
futility, a hope of controlling the future ... For it is the nature of
the future that it never arrrives ... Indeed, alleged interest in the future
may be a disguise for too much devotion to the past, and a means of avoiding
the necessity for facing unpleasant risks in the present.' Frank J, Law
and the Modern Mind (London: Stevens & Sons, 1949) 154. Llewellyn in
reviewing Frank's book observed: 'In its attack on the illusion of complete
certainty it under-emphasizes what certainty there is.; in its perception
of the importance of particulars it well-nigh denies the importance of
generals. But what of that? Are pathfinders to have no prerogative of exaggeration?'
Llewellyn, above n 168, 101. Frank, had in particular attacked Pound, who
had argued that 'property' and 'commercial' should be subject to fixed
rules but that 'human conduct' and 'conduct of enterprises' should be subject
to discretion. Ibid 103. Frank was not alone. Green said that a judicial
opinion is a justification in words of a judgment already passed. Green
L, 'The duty problem in negligence cases' (1928) 28Columbia Law Review
1014 at 1019-22. Frank defined this as 'fact scepticism' which he distinguished
from 'rule scepticism'. Fact sceptics focussed on trial courts to show
how '[n]o matter how precise or definite may be the formal legal rules
... no matter what the discoverable uniformities behind these formal rules
... it is impossible, and will always be impossible, because of the elusiveness
of the facts on which decisions turn, to predict future decisions in most,
if (not all) law suits ... .' Frank J, quoted by Duxbury, above n 15, 178.
[179] Cardozo BN, 'The Nature
of the Judicial Process' in Hall, ME (ed) The Selected Writings of Benjamin
Nathan Cardozo: The Choice of Tycho Brahe (New York: Matthew Bender, 1949)
'Lecture III The Method of Sociology' 148 - 9. Levy BH, Cardozo and the
Frontiers of Legal Thinking (New York: 1938). Frank embraced the 'hunch'
theory espoused by Dewey. See also Hutcheson JC, 'The Judgment Intuitive:
The Function of the 'Hunch' in Judicial Decision' (1929) 14 Cornell Law
Quarterly 274. Clarke and Trubeck used Cardozo to argue that the judicial
method is not exclusively deductive or inductive in a criticism of Llewellyn's
Common Law Tradition.. The judge reaches a conclusion and then justifies
it. Llewellyn saw an objective factor in guiding judges so that they are
not free to do as they wish. Their criticism is that, in underplaying the
subjective element and that the failure to take that element into account,
will lead Llewellyn to not achieving his aim: predicability. Clarke CE
and Trubeck DM, 'The Creative Role of the Judge: Restraint and Freedom
in the Common Law Tradition' (1961) 71Yale Law Journal 255. This sides
with Cardozo.
[180] Robinson ES, Law and Lawyers
(New York: Macmillan, 1935). In chapter 8 the psychological processes behind
the giving of judicial decisions are examined. Robinson claims the expressed
reasons serve to persuade the judge himself and others of the correctness
of his original conclusion. Although the operations of the judge are his
own, yet his acceptance or rejection of them is governed by his estimate
of the opinion of others.
[181] Frank criticises a decision
of Cardozo J in the New York Court of Appeals in which the question whether
a Pennsylvanian company could be sued in New York was answered by only
reference to the question 'where is the corporation?' Frank wrote: 'Clearly
the question of where a corporation is, when it incorporates in one state
and has agents transacting corporate business in another state, is not
a question that can be answered by empirical observation. Nor is it a question
that demands for its solution any analysis of political considerations
or social ideals. It is, in fact, a question identical in metaphysical
status with the question which scholastic theologians are supposed to have
argued at great length, 'How many angels can stand on the point of a needle?'
... Will future historians deal more charitably with such legal questions
as 'Where is the corporation?' Nobody has ever seen a corporation. What
right do we have to believe in corporations if we don't believe in angels?
To be sure, some of us have seen corporate funds, corporate transactions
etc. (just as some of us have seen angelic deeds, angelic countenances,
etc) but this does not give us the right to hypostatize, to 'thingify',
the corporation and assume that it travels about from State to State as
mortal men do.' Frank J, 'Transcendal Nonsense and the Functional Approach'
(1935) 25 Columbia Law Review 809, 810-1. Frank gives further corporate
law examples at 813-4.
[182] Gerwitz notes: 'But in
spite of all his attention to leeways in this book, Llewellyn's main point
was not at all to trumpet law's indeterminacy but rather to emphasize how
an adequate measure of predicability and certainty in the case law system
is achieved nevertheless.' Gerwitz P, 'Introduction' in Llewellyn K, Anasaldi
M (trans) The Case Law System in America (Chicago: University of Chicago,
1989) ix, xvii.
[183] There is 'reckonability',
which is based on the judge's selection of the right rule for the case
in hand by a guided 'situation sense'. This 'situation sense' is the product
of the whole inherited culture and craft of the law. Judicial discretion
is not exercised at large but is conditioned in a predictable way. How
successful he was in arguing that the law is predictable in this way is
a matter of legitimate difference of views. He argued that the legal system
had a surprisingly high element of predicability given the complexity of
the issues on which it adjudicated. It was false, however, to pretend that
it had 100 per cent certainty but on a case-by-case basis it could be brought
'to the level of a reasonable, sometimes a very good, business risk.' Llewellyn,
above n 96, 17. Llwellyn wrote:'The very reason appellate courts exist
is that there is doubt, that skilled men do not agree about the outcome.
To require reckonability is therefore to require the absurdly impossible.
Nevertheless, let it be repeated: this amazing institution, our Law, answers
in significant degree to the demand. That fact is vital. It needs knowing.
It also needs use.' Ibid 6-7. 'there is no suggestion of any slot-machine
or conveyer-belt complete predicability; I refer instead, let me repeat,
only to a case-by-case reckonability that can be brought to the level of
a reasonable, sometimes a very good, business risk.' This was a strong
feature of the declaratory system. As Llewellyn observes: 'Even judges
who know with their minds that varying answers would be legally permissible
will be found with a strong urge to feel that one among them must be the
right one.' Ibid 50.
[184] Llewellyn, above n 96,
6-7.
[185] '[E]ither interpretation
of the language or the sizing up of the facts, or the choice open as among
available divergent premises or tendencies in our multilayered legal scheme,
or the like, will allow a fair technical case to be made either way or
a third or a fourth way, if one lools at the authorities taken alone.'
Llewellyn, above n 96, 21.
[186] Llewellyn, above n 96,
237-9.
[187] Llewellyn, above n 96,
21-23.
[188] These other materials
include 'the accepted lines of organizing and seeing these materials: concepts,
'fields' of law with their differential importance, pervading principles,
living ideals, tendencies, constellations, tone.' Llewellyn, above n 96,
20.
[189] Llewellyn, above n 96,
340.
[190] These are: 'law-conditioned
officials'; 'responsibility for justice'; 'the tradition of one single
right answer'; 'an opinion of the court'; 'a frozen record from below';
'issues limited, sharpened, phrased'; 'adversary argument by counsel';
'group decision'; 'judicial security and honesty'; 'a known bench'; 'the
general period style and its promise'; and, 'professional judicial office'.
Llewellyn, above n 96, 6-7.
[191] Llewellyn wrote: 'By virtue
of environment and upbringing, the ethical values affecting him, the thought
patterns and mental images absorbed from his surroundings, a man is conditioned,
limited, and unconciously constrained to such a degree that his so-called
freedom of action seems little more than mechanical. ... [I]n seeing man
as a product of his times and his rather narrow social circumstances, in
seeing him indeed as a fungible commodity swept along by outside factors,
the sociologist's eye scans whole regions, mass-scale phenomenon lasting
years and decades - the economic, religious and other forces that affect
human behaviour. I do not deny that the judge, as man, can be seen in this
light. ... As man he is, indeed, constrained. As a man with legal training,
who wants to base his decision on existing rules of law, who wants in fact
to be confined by them, and who, besides this, has so internalized the
rules and institutions that he could no longer shake them off even if he
wished - as lawyer, then, he is further constrained.' Llewellyn, above
n 182, 11. According to Fish the primary constraints on judges comes from
their socialisation in a profession which makes them members of an interpretative
community who in their training have internalised ways of reading and understanding
legal texts. For Fish this is the source of the restraint and not the text.
Gerwitz, above n 182, ix, xviii-xix. Fish S, 'Working on the Chain Gang:
Interpretation in Law and Literature' (1982) 60 Texas Law Review 551 and
Is There a Text in This Class? (Cambridge, Mass: Harvard University Press,
1980) also acknowledges that the constraint of the interpretative community
is not absolute and that legal interpreters are free to construct their
own interpretations and discover their own values in the text. The shared
values do not ground a new objectivity. His views have been challenged
by Fiss who has argued that the courts must give meaning to public values
- especially constitutional values - by engaging in 'a special dialogue'.
Fiss insists that the dialogue is so closely restrained that judges cannot
merely express 'personal beliefs.' Fiss OM, 'Objectivity and Interpretation'
(1982) 34 Standford Law Review 739. Fiss OM 'The Death of the Law' (1986)
72 Cornell University Law Review 1. Feldman SL, 'Republican Revival/Interpretative
Turn' [1992] Wisconsin Law Review 679, 699-700.
[192] 'Law (Certainty) and Justice
are set up not merely to reflect an upshot of tensions and drives, but
instead to give merged, moving, reasoned guidance. That Law (Certainty)
and Justice need not be two, but can be one, and that machinery not only
can be but has been devised on a largish scale to make that a normal rather
than a strange phenomenon ... .' In a later note Llewellyn observes that
instead of certainty 'I should today say: Reasonable Regularity.' Llewellyn,
above n 168, 286 and note b.
[193] 'I would argue that traditionalism
has persisted in law more strongly than elsewhere partly (and this is bad)
because the law is not directly in contact with hard fact, but works at
one remove from business, which itself works at one remove from things.
But partly (and this has virtue) because one great value of law lies precisely
in opposing and braking change; in choosing late among experiments, after
they have competed long enough to afford a better guess at which of them
is best; in crystallizing the experiments chosen as the new and solid basis
for new experiments, which can then work from a common foundation. Law's
precise office is not to change but to prevent change; or when that will
not do, then to adjust with the least possible rearrangements to the new
conditions. Obviously this job of conservation is overdone, much overdone,
as things stand. The machinery for gradual readjustment should be consciously
improved. But the question is: Why the illusion of certainty? And I should
answer, because (at least in part) even adventurous spirits want some footing
to adventure from. That need is practical.' Llewellyn, above n 168, 108.
[194] 'One of the virtue of
a precedent system is that, where appropriate, judges are able to make
small experiments with legal rules, which they can always revise to take
account of new, unforeseen fact situations until they arrive at an appropriate
legal rule (or even a legal 'institution').' Llewellyn, above n 182, 56-7.
[195] Glover, above n 29, 4
and note 18, quoting Weber M, Roth G and Wittich C (ed) Economy and Society
(1978), 884. Llewellyn, in drafting the Uniform Commercial Code sought
to give expression to this second view. It created ethical standards, such
as unconscionability, which could then be used, as Lord Mansfield had done
in the 18th century, by the judge to discover the 'commercial law immanent
in the commercial community.' Ibid 5.
[196] In The Cheyenne Way Llewellyn
radically revised his views of the process which makes law in the common
law tradition. What impressed Llewellyn was the resolution of the conflict
which occur between legal rules which seek to ensure justice by treating
all similar cases the same and the desire to do justice by recognising
the particular circumstance of each individual. Overemphasis on the first
can produce certainty which defeats the object of the second. Overemphasis
on the second can defeat the object the second. Llewellyn and Hoeble wrote:
'what the Cheyenne law-way shows here ... is that a significant high development
of certainty and clarity of, of prospective outcome, felt even by most
litigants in the heat of controversy, can be achieved on a not unelaborate
scale, without the growth of such 'law' and 'legal procedure' as rigidifies
upon itself, and comes so into opposition with the felt justice of a newer
generation.' Twining, above n 168, see generally Chapter 8 for an account
of the The Cheyenne Way, 153-169.
[197] Llewellyn wrote: 'Indeed
it may be queried whether any sane public regulation of economic activity
is the public interest - whatever that may be - is not largely accidental.
The way of growth seems to be along whatever balance results from the pull
and prodding of this and the other private interest. For private interests
seem to have been the influential factors in law's major changes in the
past. Their working constitutes the striking phase of law's relation to
economics today. Increasingly, associations are forming which adopt their
own rules of action and even settle their own disputes. Corporation, labor
union, manufacturer's association, farmers coöperative - their number,
size and experience increase. And the rules which by the permission of
the state, and within the limits which the state prescribes, such associations
lay down and apply, are prt of the body of our law. They are working rules;
the working rules of technical activity; the very type of working rules
which the official legal institutions are unable to construct. Their justification
consists in that they are, and that they work. Within their sphere they
are like law in all but the numbers they affect, and can be dealt with
on that basis with propriety. I like to call them by-laws; the laws of
a lesser group, of more or less voluntary constitution.' Llewellyn K, 'The
Effects of Legal Institutions upon Economics' (1925) 15 American Economic
Review 665, 672-3.
[198] This led to realism being
seen as associated with relativism, nihilism, disdain for the rule of law,
conflating right and might and unable to resist totalitarianism. Duxbury,
above n 15, 193-4. Gordon, above n 39, 2216. Dworkin, with his emphasis
on the moral, rejects the pragmatism of realism for this reason. Dworkin,
Law's Empire, above n 186, 147-9, 154-5.
[199] Berle and Means, above
n 130, 352-7.
[200] Teubner, Bankowska and
Adler, above n 65, 132-3.
[201] Time called it 'the economic
bible of the Rooseveldt administration'. Hovenkamp H, Enterprise and American
Law, 1836-1937 (Cambridge: Harvard University Press, 1991) 360.
[202] Duxbury, above n 39, 155-8.
[203] Hovenkamp above n 201,
362. Berle and Means made an impact on other economists, including the
neo-classicist Henry Simons. Simons argued for 'gigantic' corporations
to be held to Spartan simplicity in their capital structures.' Simons HC,
'A Positive Program for Laissez Faire: Some Proposals for a Liberal Economic
Policy' in Harry D Gideonse ed, Public Policy Pamphlet No 15 (Chicago:
Chicago University Press, 1934) 12, 19, 21.
[204] Eskridge and Frickey state
that legal process was constituted by three principles. Holmes argued that
legislatures and not courts were the best institutions to make social policy
choices. Legal policy makers were required to consider a utilitarian cost-benefit
analysis when choosing one rule over another. Justice Frankfurter, who
had also taught at Harvard, developed the next great legal process concept;
'institutional competence': each organ of government has a special competence
or expertise. The third proposition was made by Lon Fuller: the democratic
structure of the United States ensured the reasonableness of its laws.
Legal process came under a cloud in the 1960s as the civil rights movement
exposed laws that were enforced although they were in conflict with all
three principles. Eskridge WN and Frickey PP, 'The Making of the Legal
Process' (1993) 107 Harvard Law Review 2031. Gordon, above n 39, 2216.
[205] Eisenberg argues that
the common law has two fundamental properties: common law rules are not
completely certain and the common law is comprehensive in that there is
a legal answer to every question, 'What is the law concerning this matter?'
The two rules are corollaries. The law is generated, in his analysis, not
from doctrinal propositions stated in texts from which courts work backwards
but by institutional principles, including previous statements of doctrine
and 'applicable social propositions', from which they work forward to make
law. Eisenberg, above n 43, 156-7.
[206] Calabresi G, 'Grant Gilmore
and the Golden Age' (1982) 92 Yale Law Journal 1, 2.
[207] Davies, above n 68, 126-7.
[208] Fraser D, 'What a Long
Strange Trip It's Been: Deconstructing Law from Legal Realism to Critical
Legal Studies' (1988) 5 Australian Journal of Law and Society 35.
[209] Marxism bears features
of positivism and economic analysis as a result of Marx's application of
nineteenth century scientific theories to economic history. Bullock A,
Stallybass O and Trombley S, The Fontana Dictionary of Modern Thought (Fontana:
London, rev ed, 1988), 330, 504-5.
[210] Scheurerman WE, Between
the Norm and the Exception: The Franfurt School and the Rule of Law (Cambridege,
Mass: MIT Press, 1994) 2. Neumann F, The Rule of Law: Political Theory
and the Legal System in Modern Society (Leamington Spa: Berg, 1986) 'Chapter
14 The Legal System of the Competitive Society' 212-65, 255-6. He discusses
the National Socialist abrogation of a free labour market in corporatist
Germany, 296-7.
[211] Wiarda defines 'corporatism'
as where: ' 1. Society is organized, in whole or part, not an individualistic
basis ... but in terms of the functional, societal, or 'corporate' units
(...labor or business unit, interest groups, etc) that make up the nation.
2. The state seeks to structure, limit, organize or license these groups
as a way of controlling them ... 3. The state tries to incorporate these
groups into the state system, converting them into what are called 'private
sector governments'; while the groups themselves seek to take advantage
in terms of prgrams and benefits for their members from such incorporation,
and at the same time preserving some, usually contractually defined ...
autonomy from the state.' Wiarda HJ, The Other Great 'Ism' (Amonk, NY:
ME Sharpe, 1996) 9.
[212] Cotterell R, 'The Rule
of Law in Transition: Revisiting Franz Neumann's Sociology of Legality'
(1996) 5 Social and Legal Studies 451, 451-7. To some extent he anticipated
the mass information market of the 1980s and 1990s in which range of product
and consumer choice is reduced to minimise corporate risk in which the
ideology of the free market is used to support the extension of bureaucracy
and technology into all aspects of life. Ibid 458. Neumann E, 'On the Preconditions
and Legal Concept of an Economic Consitution' in Kirchheimer O and Neumann
F (ed) Tanner E and Tribe K (trans) Social Democracy and the Rule of Law
(London: Allen & Unwin, 1987) 44-84.
[213] Neumann, above n 103,
213.
[214] Ibid 213.
[215] '[I]n spite of the lack
of systemisationin English law, there must lie at the bottom of the doctrine
of the binding force of precedent, the conception of the logical closeness
of law. If all decisions are only to be reached on the basis of decisions
already made, then the implication is that the legal system is complete,
closed and logically consisten, so that any change in the system can only
be made by way of legislation.' Ibid 245, 265.
[216] Whatever the accuracy
of his views of German law there are difficulties in oversimplifying the
stages of development of the common law. As Llewellyn observed Lord Mansfield
CJ, in a formative stage of the English industrial revolution, specifically
sought in the 'Grand style' to embody a concern with the good ordering
of society in commmercial law which reduced the binding nature of precedent.
Evans J, 'Change in the Doctrine of Precedent During the Nineteenth Century'
in Goldstein L (ed) Precedent in English Law (New York: Clarendon Press,
1987) 38.
[217] Schlegel wrote: 'I hazard
a guess that the reference to the Frankfurt School of Criticial Marxism
in the title of the organization was probably lost on many, if not most,
of the participants at the first meeting' Schlegel JH, 'Notes Towards an
Intimate, Opinionated, and Affectionate History on the Conference on Legal
Studies' (1984) 36 Stanford Law Review 391, 403. Kennedy D, 'Critical Theory,
Structuralism and Contemporary Legal Scholarship' (1985) 21 New England
Law Review 209. Bickenbach JE, 'CLS and CLS-ers' (1984) 2 Queen's Law Journal
263, 266-8.
[218] Cornwall D, 'Towards a
Modern/Postmodern Reconstruction of Ethics' (1985) 133 University of Pennsylvania
Law Review 291. See the symposium, 'Deconstruction and the Possibility
of Justice' (1990) 11 Cardozo Law Review 919.
[219] 'Symposium on the Renaissance
of Pragmatism in American Legal Thought' (1990) 63 Southern California
Law Review 1569. Levinson S, 'Strolling Down the Path of the Law (and Toward
Critical Legal Studies?): The Jurisprudence of Richard Posner' (1991) 91
Columbia Law Review 1221. Kellogg FR, 'Legal Scholarship in the Temple
of Doom: Pragmatism's Response to Critical Legal Studies' (1990) 65 Tulane
Law Review 15.
[220] Kennedy D, 'Form and Substance
in Private Law Adjudication' (1976) 89 Harvard Law Review 1685. Kennedy's
views are criticised in Kellman M, A Guide to Critical Legal Studies (Cambridge,
Mass: Harvard University Press, 1987). He subsequently suggested, following
Hegal, that indeterminacy is embedded in human consciouness. The very 'goal
of individual freedom is at the same time dependent on and incompatible
with the communal coercive action that is necessary to achieve it' or 'Through
our existence as members of collectives, we impose on others and have on
us hierachal structures of power, welfare, and access to enlightenment
that are illegitimate.' Kennedy D, 'The Structure of Blackstone's Commentaries'
(1979) 28 Buffalo Law Review 205, 211-12. Kennedy later retreated from
this position. Kennedy D, 'Gabel P and Kennedy D, 'Roll Over Beethoven'
(1984) 36 Standford Law Review 1, 15.
[221] McCahery J and Picciotto,
above n 49, 246-7 referring to: Unger R, Politics: False Necessity: Anti-necessitarian
Social Theory in the Service of Radical Democracy, Vol 1 (Cambridge: Cambridge
University Press, 1987)
[222] Unger RM, Knowledge and
Politics (New York: Free Press, 1975) 262.
[223] Unger RM, Law in Modern
Society: Towards of Social Theory (New York: Free Press, 1976) 239.
[224] Unger continues: 'The
only solution would be the one that every such compromise is meant to avoid:
the remaking of the institutional arrangements that define the market economy.
The doctrinal manifestation of this problem is the vagueness of the concept
of economic duress. The cost of preventing the revised duress doctrine
from running wild and correcting almost everything is to draw unstable,
unjustified and unjustifiable lines between the contracts that are voidable
and those that are not. In the event, the law draws these lines by a strategy
studied indefinition though it might just as well have done so - as it
so often does elsewhere - through precise but makeshift distinctions.'
Unger RM, The Critical Legal Studies Movement (Cambridge, Mass: Harvard
University Press, 1986) 71.
[225] 'One of the most remarkable
features of classical contract theory is its oscillation between an ideal
of strict altruism in a confined range of situations and a tolerance for
unrestrained self-interest in the great majority of contracts. Thus, in
fiduciary relations one party may be required to confer upon the other
party's interests a weight greater than upon his own (or, in any event,
at least equal to his own). In the ordinary commercial contract, however,
the other party's interests can be treated as of no account as long as
the rightholder remains within his zone of discretionary action.' Ibid
83.
[226] 'The current law of fiduciary
relations consists largely of a list of special circumstances, often defined
by signs which have only an oblique connection with the facts that engender
trust or self-restraint. Consider, for example, the joint venture, an agreement
that imposes fiduciary duties upon the coadventurers. It may be defined
simply as an informal partnership of limited scope and duration that provides
for a sharing of gains and losses by all the venturers. A contractual arrangement,
however, may involve a close, difficult, long-term collaboration that calls
for the exercise of prudent discretion without being directed to an uncertain
profit. Such an undertaking may well be viewed by its participants as one
demanding from each of them the most scrupulous regard to mutual loyalty.
Conversely, a contract that looks to an undefined reward rather than to
an exchange of predetermined performances may require, and be understood
to require, only a minimum of actual cooperation.' Ibid 84.
[227] Unger stated: 'legal theories
of substantial justice remain isolated in a politically inhospitable atmosphere
so that, though suffieciently vital to help legitimate the social order,
they may never be enough to transform it.' Unger, above n 223, 213.
[228] Branson DM, 'Indeterminacy:
The Final Ingredient In An Interest Group Analysis of Corporate Law' (1990)
43 Vanderbilt Law Review 85. Branson identifies two tools of indeterminacy
in the hands of Delaware courts dealing with corporate litigation: the
Delaware equal dignity rule and its converse, or antipode, the Schnell
doctrine. In spite of intuition that the Delaware courts would favour management
in corporate disputes he finds that there are a surprising number of pro-shareholder
decisions.
[229] Unger , above n 224, 89.
Kennedy makes the same point that these struggles produce a conflicting
body of laws derived from conflicting ethical norms. Kennedy D, 'Form and
substance in private law ajudication' (1976) 89 Harvard Law Review 1685.
[230] As Zizek observes Marx's:
'great achievement was to demonstrate how all phenomena which appear to
bourgeois consciousness as simple deviations, contingent deformations and
degenerations of the 'normal' functioning of society ... , and as such
abolishable throught the amelioration of the system, are necessary products
of the system itself - the points at which the 'truth', the immanent antagonistic
character of the system, erupts.' Zizek S, The Sublime Object of Ideology
(New York: Verso, 1989) 128.
[231] The radical position rejects
the rights theorists' beliefs that right provide a rational basis for making
normative judgments. In particular the law does not help in predicting
the results in hard cases which is where certainty is particularly required.
They claim that this generate unreal expectations and the criteria used
for rights fail to support progressive judgments because of their indeterminacy,
which cannot be made determinant by theory or social context, Tushnet M,
'An Essay on Rights' (1984) 62 Texas Law Review 1363, 1380. There has been
a view that rights can be reconstructed to be more responsive to the needs
of the disadvantaged. Williams, 'Alchemical Notes: Reconstructed Ideals
from Deconstructed Rights' (1987) 22 Harvard Civil Rights-Civil Liberties
Law Review 401. Most draw on Marx's analysis that it reinforces an alienated
and destructive human consciousness, Gabel P, 'The Phenomenology of Rights
- Consciousness and the Pact of the Withdrawn Selves' (1984) 62 Texas Law
Review 1563.
[232] Altman, Andrew, Critical
Legal Studies: a Liberal Critique, Princeton, Princeton University Press,
1990. This reflects a similar division within Realism. Mark Tusnet, 'Critical
Legal Studies: an Introduction to its Origins and Underpinnings' (1986)
36 Journal of Legal Education, 505 at 505.
[233] Branson, above n 228,
85. Branson identifies two tools of indeterminacy in the hands of Delaware
courts dealing with corporate litigation: the Delaware equal dignity rule
and its converse, or antipode, the Schnell doctrine. In spite of intuition
that the Delaware courts would favour management in corporate disputes
he finds that there are a surprising number of pro-shareholder decisions.
[234] See for example Hadden's
analysis of collective investments and various models of capitalism in
Hadden T, Company Law and Capitalism (London: Weidenfield and Nicholson,
1972) 375-400. Also see Campbell D, 'Why Regulate the Modern Corporation?
The Failure of 'Market Failure'' in McCahery J, Piccciotto S and Scott
C (ed) Corporate Control and Accountability: Changing Structures and the
Dynamics of Regulation (Oxford: Clarendon Press, 1993) 103 and Wheeler
S, 'Capital Fractionalized: The Role of Insolvency Practitioners in Asset
Distribution' in Cain M and Harrington CB Lawyers in a Postmodern World:
Translation and Transgression (Buckingham: Open University Press, 1994)
85. Gordon suggests that English lawyers have been generally unable to
accept the CLS approach to indeterminacy because of the homogenous nature
of the English legal profession. But the reaction seems to be more to the
self-conscious way in which the CLS have critiqued the law, their law schools
and themselves as an identifiable movement. Gordon, above n 39, 2238-9.
[235] Wilhelmsson distinguished
the following levels and types: '(1) following Eriksson, take a starting
point in the vertical conflict between intralegal goal formulations and
concrete legal norms, if such goal formulations which are incorporated
into the law are taken literally they often prove to go much further than
the legal measures through which the goals are intended to be realised;
(2) different branches of the law can be characterised by partially differing
social values, such contradictions exist not only between traditionally
counterposed fields such as private law and public law but within private
law corresponding conflicts have arisen, todays private law 'embodies a
multiplicity of special private laws, long without conceptual, dogmatic
unity; (3) conflict can be located to the relationship between legal elements
within the same branch of law, within the law of contract, for example
there may occur separate cases, separate statutes that express mutually
conflicting values.' Wilhelmsson, above n 59, 35. Unger also identified
the conflicts between different levels of abstraction, principles, rules
etc. Unger, above n 224, 89-90.
[236] Teubner describes the
contradictions which have been uncovered in legal doctrine but asks: 'But
how radical a critique of law is this? It appears to me that the rediscovery
of indeterminacy, the ideological demystification of legal doctrine, all
the 'debunking' and 'trashing', only gets to the superstructural phenomena
of legal self-descriptions but never to the heart of the fundamental legal
paradox.' Teubner, Bankowska and Adler, above n 65, 6.
[237] Ibid 1-12.
[238] Ewald writes of this thesis:
'Its validity does not depend on its being a truer theory than others (from
its point of view true and false are not good criteria for distinguishing
one theory from another), but merely more profitable at a particular point
in time. The doctrine of autopoiesis can take its validity only from its
performance in our current legal position. It has no value in itself. It
is in relation to the self-regulation of contemporary legal practice that
it should be evaluated.' Ewald F, 'The Law of Law' in in Teubner G (ed)
Autopoietic Law: A New Approach to Law and Society (Berlin: Walter de Gruyter,
1988) 36, 43.
[239] Ost F 'Between Order and
Disorder: The Game of Law' in Teubner, above n 238, 70, 77-9.
[240] That is phenomenona of
communications and control within organisms with a disposition to maintain
critical variables within particular limits acceptable to their own structures,
in the face of unexpected disturbance. Bullock, Stallybass and Trombley,
above n 203, 197, 391-2. In particular autopoiesis was a term invented
by the biologist Humberto Maturana for a specific form of homeostasis in
which the system that is held constant is the system's own organisation.
Ibid 63. There are competing paradigms of what autopoiesis is. Ost, above
n 238, 70, 71-4. King M, 'The 'Truth' About Autopoiesis' (1993) 20 Journal
of Law and Society 218, 218. Teubner has written: 'Legal autopoiesis and
postmodern jurisprudence have several things in common: the linguistic
turn away from positivist sociology of law, the dissolution of social and
legal realitities into discursivity, the image of fragmentation and closure
of multiple discourses, the nonfoundational character of legal reasoning,
the decentering of the legal subject, the eclectic exploitation of diverse
traditions in legal thought, the preference for difference, différance
and différends over unity, and most important, the foundation of
law on paradoxes, antimonies, and tautologies.' Teubner G, 'The Two Faces
of Janus: Rethinking Legal Pluralism' (1992) 13 Cardozo law Review 1445,
1445.
[241] Lempert R, 'The Autonomy
of Law: Two Visions Compared' in Teubner, above n 238, 155-7. Kennealy
accepted that it was put forward by Luhmann and Teubner in Florence in
1987 as a theory and not a metaphor. Kennealy P, 'Talking About Autopoiesis
- Order from Noise' in Teubner, above n 238, 351-2.
[242] Teubner G, ''And God laughed
...', Indeterminacy, Self reference and Paradox in law', Joerges C and
Trubeck DM (ed) Critical Legal Thought: An American-German Debate (Baden-Baden:
Nomos, 1989) 399. 409. Wilhelmsson, above n 59, 34-5 draws on Teubner's
analysis to reach similar conclusions.
[243] Teubner, Bankowska and
Adler, above n 65, 56. Teubner claims that this distinguishes law from
Hayek's and Posner's evolutionary processes in law as a process of the
natural selection of economic efficiency which severely understates the
autonomy of legal evolution which absorbs change from other social features
apart from the economy. Ibid 56-7.
[244] Ibid 57.
[245] The metaphor which is
used for 'interference' is 'order from noise'. Systems influence each other
by pertubation, structural coupling and co-evolution. Teubner, above n
239, 1445-6. Teubner is now inclined to think that this does not sufficiently
describe the openess of law to other cultural areas such as politics, science,
economics and religion as the 'interdiscurvity' is more than noise or peturbation.
He now uses a modified form of structural coupling. He sees that rather
than peturbation the law 'productively misreads' other cultural areas as
sources from which to produce legal norms. Strutural coupling is replaced
with the concept of 'linkage institutions' indicating that the system of
law is characterised by specialised institutions which bind it to a number
of external sub-systems and organisations. Co-evolution is replaced with
responsiveness as co-evolution would only lead to law having viable internal
constructs of the external development. Responsiveness describes the manner
in which law tacitly synchronises legal and social organisations. Teubner,
above n 239, 1447-8.
[246] Teubner, Bankowska and
Adler, above n 65, 65. Luhmann N, 'The Unity of the Legal System' in Teubner,
above n 238, 12, 20-3. Teubner previously described this as a paradox:
'The radical closure of the system - under certain conditions - means its
radical openess. This is one of the most challenging thesis of autopoietic
theory. The more the legal system gains in operational closure and autonomy,
the more it gains in openess toward social facts, political demands, social
science theories, and human needs.' Teubner G, 'Introduction to Autopoietic
Law' in Teubner, above n 238, 2.
[247] Luhmann N, 'Operational
Closure and Structural Coupling: The Differentation of the Legal System'
(1992) 13 Cardozo Law Review 1419, 1427. This was a concept he introduced
as a result of the rising criticisms that the autonomy of systems is produced
both inside and outside the system. Münch R, 'Autopoiesis By Definition'
(1992) 13 Cardozo Law Review 1463, 1463.
[248] Luhmann, above n 247,
1435.
[249] Teubner, Bankowska and
Adler, above n 65, 65.
[250] Ibid 74.
[251] See above n 65. See also
Gould M, 'Law and Sociology: Some Consequences for the Law of Employment
Discrimination Deriving from the Sociological Reconstruction of Economic
Theory' (1992) 13 Cardozo Law Review 1517.
[252] Luhmann notes that from
the fourteenth century on the legal system adapted to the requirements
of the economic system by developing 'slowly, with many scruples' freer
forms of contract, property and corporate law which in the nineteenth century
was freed of political privilege. Luhmann, above n 247, 1435 and note 51.
[253] Teubner, Bankowska and
Adler, above n 65, 105-6. The flexible standards used by law look to the
particular system which is being regulated for content and meaning giving
the factors used in that other system and are not clear cut legal questions.
It is this issue that Luhmann's structural couplings between systems tries
to explain as it is all to clear in codified legal systems and more so
in common law jurisdictions that judges have to weigh myriads of competing
and conflicting rights. Münch, above n 247, 1468-9. Luhmann, above
n 247, 1419.
[254] On the other hand Luhmann's
law looks empty. He has a normative closure which does not give content
to the law and which could in itself contain a high level of indeterminacy.
Teubner has now replaced this with the idea of institutional linkage. Teubner
writes of the standards used in law like good faith and reasonableness:
'They have no fixed reference and take on a different meaning according
to the context of the relevant discourse. They have no predetermined content
but are the loci for socio-legal debate. These concepts are 'essential'
because they they reflect the very intrinsic logic of the discourses involved.
And they are 'contested' because they reflect basic discursive differences.
They do not create a new unity of separate discourses involved, they only
link them transcending the boundaries but respecting, even reaffirming
them. In spite of their identical nom propre they are purely internal constructs,
separate but complementary.' Teubner, above n 239, 1458.
[255] Teubner, Bankowska and
Adler, above n 65, 125-6.
[256] Ibid 133-4. Teubner argues
that while contractual arrangements are quick and flexible they are inadequate
in fully exploiting 'organizational surplus value.' This value, he argues,
arises from three sources: '(1) long term relationships of co-operation
which would continually be destroyed by contractual flexibility; (2) 'commitments'
in the organization, which, by contrast with rigid, narrowly circumscribed
contractual obligations, make the situation far more flexible; and (3)
the orientation of the actors towards the interests of the organization,
which has more pulling power than a purposive view of contract.' Ibid 140.
[257] Ibid 140.
[258] Ibid 17, 143-4.
[259] Teubner, Bankowska and
Adler, above n 65, 17 quoting Zolo D, 'The Epistomological Status of Theory
of Autopoiesis and its Application to the Social Sciences' in Febbrajo
A and Teubner G (ed) State, Law, Economy as Autopoietic Systems: Regulation
and Autonomy in a New Perspective (Milan: Giuffrè, 1992) 67.
[260] Luhmann, above n 247,
1438-9.
[261] Münch, above n 247,
1464-5.
[262] Luhmann N, 'Closure and
Openess: On Reality in the World of Law' in Teubner, above n 238, 335.
[263] The growth of financial
interests associated with the financial markets and the public debt and
the great 'monied companies', the Bank of England, the East India and the
South Sea created a new moneyed class and destroyed the old system of open
city government. Rogers N, Whigs and Cities:Popular Politics in the Age
of Walpole and Pitt (Oxford: Clarendon Press, 1989) 14. They launched,
apart from the South Sea Company, a number of other speculative enterprises
involving fictitious wealth and straddling foreign trade and public funds.
Their power is shown in the Bubble Act. The parliament banned unchartered
joint stock companies, not to protect the investing public but the South
Sea Company and other enterprises licensed by the state to the moneyed
interest from the diversion of possible funds into other speculative schemes.
Endleberger CP A Financial History of Western Europe (London: George Allen
& Unwin) 196-7. In London there were also competing versions of law.
What the lawyers made a criminal offence in the drafting of the Bubble
Act they undid for others by combining concepts of the trust and partnership
to reproduce the unchartered joint stock company outside the control of
the state. This is the ancestor of the modern company in the common law
world outside the United States. Bone RG, 'Review Essay: Personal and Impersonal
Litigative Forms: Reconceiving the History of Adjudicative Representation
From Medieval Litigation to the Modern Class Action by Stephen C Yeazall'
(1990) 70 Boston University Law Review 213, 238, 241.
[264] Thompson EP, Customs in
Common (Harmondsworth: Penguin, 1991) 102, citing Pierre Bourdieu, Outline
of a Theory of Practice, Cambridge, 1977, chapter 4 which he acknowledges
is a gloss on Bourdieu's concept. Bourdieu P, 'The Force of Law: Towards
a Sociology of the Juridical Field' (1987) 38 Hastings Law Journal 805,
814. Bourdieu recognises that his theory is similar to that of Luhmann
but he argues that Luhmann has confused the symbolic domain with the social
field in which it is produced leading to a functionalist and organicist
view. McCahery and Picciotto, above n 49, 253.
[265] The quotation continues:
'Each encroached on the usages of others. The rich employed their riches,
and all the institutions and awe of local authority. The middling farmers,
or yeoman sort, influenced local courts and sought to write stricter by-laws
as hedges against both large and petty encroachments; they could also employ
the discipline of the poor laws against those beneath them, and on occasion
they defended their rights against the rich and powerful at law. The peasantry
and the poor employed stealth, a knowledge of every bush and by-way, and
the force of numbers. It is sentimental to suppose that, until the point
of enclosure, the poor were always the losers. It is deferential to suggest
that the rich and great might not act as law-breakers and predators.' Thompson,
above n 264, 102-3. Again in the forests Thompson notes that custom in
respect of the forests was based on claim and counter-claim supported on
various basis by different communities and individuals with an interest
in the forest. Thompson EP, Whigs and Hunters (Harmondsworth, Penguin,
1994), 31-2.
[266] Thompson, above n 264,
2.
[267] Harvey D, The Condition
of Postmodernism: An Inquiry into the Origin of Cultural Change (Blackwells,
Cambridge, Mass, 1989) 62-3.
[268] Thompson, above n 264,
3-6.
[269] Thompson, above n 264,
10-11.
[270] Ibid 11.
[271] Ibid. Hartog, above n
70, 899-900, 931.
[272] 'A custom ... is not necessarily
a practice confirmed by judicial doctrine or statute. Legal authority may
emerge from numbers of governmental and quasi-governmental institutions
and practices. Prosecutorial discretion, bureaucratic inertia, fiscal incapacity
may all play parts as sources and justification for the practice, as may
the realization that the action against the custom might undermine the
legitimacy or effectiveness of the political order.' Ibid 935. ' In a modern,
complex, and highly differentiated society such as ours, government is,
after all, only one major system among others: the economy, the mass media,
the educational system, the family, science, religion, the medical system,
and so forth. Government is not an overarching whole of which these are
parts, as in the ancient polis; nor is it the pinnacle of a social hierarchy,
as in feudal kingdoms; nor the center of society, as in the court of the
Sun King. Rather, as Niklas Luhmann writes, ours is a society 'without
summit and without center.'' (footnotes omitted) Galanter M and Luban L,
'Poetic Justice: Punitive Damages and Legal Pluralism' (1993) 42 American
University Law Review 1393, 1400-01.
[273] Hartog, above n 70, 934-5.
[274] Thompson, above n 265,
146 and note 2.
[275] 'The ruling class projected
an image of itself as bound by the law. They were constrained by their
announcement that this is the way the game was played. They could not break
the rules or the game would given away. The other classes did not shrug
off this as rhetoric but also embraced it in the idea of the free born
Englishman and the rule of law. If the law had been taken away the royal
prerogative or the prerogatives of the aristocracy may have engulfed the
property of the gentry.' Thompson, above n 265, 264.
[276] In Customs in Common he
specifically considers the civil law and concludes: 'The civil law afforded
to the competing interests both a set of defences to their property and
those rules of the game without which all would have fallen into anarchy.
The higher institutions of the law were not free from influence and corruption,
but they were freer of them than was any other profession. To maintain
their credibility, the courts must sometimes find for the small man against
the great, the subject against the King.' Thompson, above n 264, 34-5.
[277] A mature legal system
can establish a legitimacy for legal rules which can be used to give confidence
to investors. Weber M, Roth G and Witich C (eds), Economy and Society:
An Outline of Interpretative Sociology 31, 1968 reprinting Weber M, 'The
Theory of Social and Economic Organisation' 124-5 (A Henderson & T
Parsons trans 1947). He argued that legitimacy contemplates a widespread
belief that an order is obligatory or exemplary, that this belief is a
reason for action, and is associated more with conformity than with self-interest.
Hyde A, 'The Concept of Legitimisation in the Sociology of Law' [1983]
Wisconsin Law Review 379 challenged this assumption as vague and inaccurate.
He argued that the law cannot legitimate any social order and that most
of what is taken to be the power of the legal order is the convergence
of legal doctrine and self interest. He claims that there is no proof that
law affects beliefs which in turn affects behaviour. Ibid 379, 385.
[278] The yeomanry particularly
turned to law where there copyhold and customary tenures were strong. Searle
CE, 'Custom, Class Conflict and Agrarian Capitalism: The Cumbrian Customary
Economy in the Eighteenth Century' (1986) Past and Present 110, 121-32.
[279] Imbrication of a popular
sense of justice which both followed, and departed from the law, is shown
by a number of Hampshire people charged under the Act who were tried and
executed in London. They complained because they had been tried outside
their country. Thompson, above n 265, 154-5. They also regarded the stealing
of deer as the poaching of wild game and very different from stealing domestic
horses and cows making their punishment even more unjust. Ibid 162. For
an example of a 'received collective memory' of a tradition of natural
justice and social justice which could be in conflict with the civil and
criminal law in a mining community proletarianised by the industrial revolution
see Francis H, 'The Law, Oral Tradition and the Mining Community' (1985)
12 Journal of Law and Society 267, 268.
[280] Harvey, above n 267, 44,
98. Gordon wrote that Thompson was 'determined to write history through
the eyes of people who had been crushed under the wheels of history, especially
the wheels of economic 'progress'.' Gordon RW, 'EP Thompson's Legacies'
(1994) 82 Georgetown Law Journal 2005, 2005.
[281] Robert Fine, 'The Rule
of Law and Muggletonian Marxism: The Perplexities of Edward Thompson' (1994)
21 Journal of Law and Society 193, 198.
[282] Harvey, above n 267, 45.
[283] Ibid 52. As Harvey notes
Habermas seeks to return to the dialogue of the Enlightenment.
[284] R v Dodd (1808) 9 East
516. This appears to be amongst the first prosecutions under the Bubble
Act for 87 years. Uncertainty whether joint stock companies were illegal
at common law continued after the Bubble Act was repealed. Andrews, above
n 55, 18.
[285]
[286] Bottomley notes the paradox
that law plays little part in the corporate bureaucracy but that some external
force like law is needed to produce change. Bottomley S, 'Book Review:
Moral Mazes: The World of Corporate Managers by Robert Jackall, 1988, Oxford,
Oxford University Press' (1991) 1 Australian Journal of Corporate Law 192,
197. Tomasic and Bottomley reached this conclusion in their study of Australian
company directors. Andrews N, 'Jumbucks in the Bosses' Tuckerbags: Book
Review: Directing the Top 500: Corporate Governance and Accountability
in Australian Companies by Roman Tomasic and Stephen Bottomley' (1993)
3 Australian Journal of Corporate Law 271, 274-6.
[287] Taxonomy has played some
role in jurisprudence since Roscoe Pound's doctoral thesis proposing a
taxonomy of plants from Nebraska influenced his classification of 'fields
of legal order'.Pound R, 'The Theory of Judicial Decision' (1923) 36 Harvard
Law Review 940, 958. Cotterell R, The Politics of Jurisprudence: A Critical
Introduction to Legal Philosophy (London: Butterworths, 1989) 159-64.
[288] Jerome Frank, as a judge
wrote: 'the conventions of judicial opinion-writing - the uncolloquial
vocabulary, the use of phrases carrying with them the idea of finality,
the parade of precedents, the display of seemingly rigorous logic bedecked
with 'therefores' and 'must-be-trues' - give an impression of certainty
(which often hypnotizes the opinion writer) concealing the uncertainties
inherent in the judging process.' Frank J, dissenting, in United States
v Rubinstein 151 F 2d 915, 923 (1945: 2nd Cir).
289 Endicott TAO, 'Linguistic Indeterminacy' (1996) 16 Oxford Journal
of Legal Studies 667, 668.
[290] Hart, above n 72, 278.
Cardozo, above n 17, 130.
[291] Zapf and Moglen, above
n 78, 485.
[292] It is used to indicate
that words dictate meaning. Hoy DC, 'Interpreting the Law: Hermeneutics
and Poststructuralist Perspectives' (1985) 58 Southern California Law Review
135. It is used to deny the position that words have universally valid
meanings. Kennedy K, 'The Turn to Interpretation' (1985) 58 Southern California
Law Review 251. It has come to have a sense of how the different perspectives
or views present in law affect interpretation. Brest P, 'Who Decides?'
(1985) 55 Southern California Law Review 661, 662.
[293] 'In all fields of experience,
not only that of rules, there is a limit, inherent in the nature of language,
to the guidance which language can provide. There will indeed be plain
cases constantly recurring in similar contexts to which general expressions
are clearly applicable ... where there is general agreement in judgments
as to the applicability of the general terms ... but there will also be
cases where it is not clear whether they apply or not.' Hart, above n 72,
123. Hart adopted the concept of 'open textured' from Waismann: '[H]owever
smoothly they work over the mass of ordinary cases, [they will], at some
point where there application is in question, prove indeterminate; they
have what has been termed and open texture ... uncertainty at the bordeline
is the price to be paid for the use of general classifying terms.' Waismann
F, 'Verifiability' in Flew A (ed), Logic and Language quoted in Waluchow,
above n 75, 237.
[294] Endicott, above n 289,
671-81. Zapf and Moglen argue that a number of arguments that the law is
radically indeterminate is based on a misunderstanding of Wittgenstein's
Philosophical Investigations but that Wittgenstein offered a persuasive
account of why the relations between words and their applications are unproblematic.
Zapf and Moglen, above n 78, 485.
[295] Endicott, above n 289,
681-87. For an example of how this occured with the concept of 'legal positivism'
see Greenawalt, above n 81, 4-6.
[296] Endicott, above n 289,
668, 687-8.
[297] Kress K, 'Legal Indeterminacy'
(1989) 77 California Law Review 283, 287. Zapf and Moglen attribute the
present prevalence of this idea to Fuller as a result of his attack on
Hart's argument that words, and legal rules, have a core meaning with a
penumbra of uncertainty. He argued that the penumbra was much greater than
Hart allowed. Frank and Cohen had, however, popularised the idea in the
1920s. Zapf and Moglen, above n 78, 489, 518.
[298] Schauer sees this as a
significantly American phenomenon legal theory issue with its focus on
the appellate court room. It is common to find that the rules of language
are contingent with no claims to be determinate. On the other hand the
language cannot be completely indeterminate as this denies the ability
to communicate. He acknowledges however indeterminacy may flow from a conflict
between rules, or the absence of a rule. He argues that courts are a poor
place to look for samples as the Llewellyn 'selection effect' is at work.
Court cases are a skewed sample of legal events with the cases litigated
being the hard cases not falling squarely within the legal rules. Schauer,
above n 73, xi, xii-xiii. Schauer is too severe if moderate indeterminacy
is his target. The expectations which people place on the courts has been
induced by the idea of the rule of law under which claims are made that
it is different from the 'rule of men.' The idea does exist in a number
of other jurisdictions and is not limited to common law appeal courts.
The dark shadow of the unknown cases which did not go to court is difficult
to see through. Llewellyn may be right about some of them but is unlikely
to be right about all of them. If the law is doubtful parties, particularly
in commercial disputes, are likely to seek resolution by negotiation and
compromise.
[299] Endicott, above n 289,
669, 696.
[300] Lord Hoffman, for the
Board, stated: 'But a reference to the company 'as such' might suggest
that there is something out there called the company of which one can meaningfully
say that it can or cannot do something. There is in fact no such thing
as the company as such, no ding an sich, only the applicable rules. To
say that a company cannot do something means only that there is no one
whose doing of that act would, under the applicable rules of attribution,
count as an act of the company.' Meridian Global Funds Management Asia
Ltd v Securities Commission [1995] 2 AC 500, 507. This is reminiscent of
the American realists' approach to the company. Mitchell described legal
fictions, such as the company, as 'a device for attaining a desired legal
consequence, or avoiding an undesired consequence.' Mitchell L, 'The Fictions
of the Law: Have They Proved Useful or Detrimental to its Growth' (1893)
7 Harvard Law Review 249, 253.
[301] Teubner G, 'Enterprise
Corporatism: New Industrial Policy and the 'Essence of the Legal Person'
in Daintith T and Teubner G Contract and Organisation: Legal Analysis in
the Light of Economic and Social Theory (Berlin: Walter de Grutyer, 1986)
130, 147.
[302] Llewellyn observed: 'The
words 'legal certainty' seem to evoke in most lawyers' minds an image of
simply being able to apply an existing rule of law deductively. We are
used to thinking like this, particularly since judicial opinions and legal
discourse must always be dressed up in this way so as to be socially acceptable.
My claim would be, though, that for the cases which occassion difficulties,
this kind of legal certainty never has existed and never will exist; that
to strive for this kind of certainty is a waste of time; and that legal
certainty really consists of something quiet different ... .' Llewellyn,
above n 182, 73.
[303] Gianformaggio, above n
26, 402-3. The usefulness of this method of argument has been questioned
in the physical sciences. Kuhn suggested a paradigm shift in science in
the 1960s. Scientists, he claimed, were no longer convinced by the old
paradigm that explanation could be found in the accumulation of knowledge.
There was growing belief that particular conclusions were arrived at because
of prior investigations, accidents both in the laboratory and in personality,
of paradigm shift in the scientific thought. Quantum mechanics was the
new paradigm. Kuhn TS, The Structure of Scientific Revolutions (Chicago:
University of Chicago Press, 2d ed, 1977) 2, 4, 187-98. This was severely
criticised by other scientists, Suppe F, The Structure of Scientific Theories,
(Champaign, Ill: University of Illinois Press, 2nd ed, 1977) 636-49.
[304] Gianformaggio, followingMacCormack,
has sought to develop a gradation of reasoning with judges to useconsistency,
compatibility and congruity or rational adequacy. Gianformaggio, above
n 26, 402, 403, 406-7.
[305] This also applies to economists
who model the company to generate legal norms. Hart identifies a number
of views including: the neoclassical which treats it as a production function
run by a selfless manager which fails to deal with incentive problems within
the firm and ignores its internal organisation; the agency which seeks
to inject the problem of incentives in the neoclassical view but which
does not explain why the firm has boundaries; and, transaction costs which
seeks to explain why the firm has boundaries in the costs of writing a
complete contract. Hart O, Firms, Contracts and Financial Structure (Oxford:
Oxford University Press, 1995) Chapter 1: Established Theories of the Firm'
15-28.
[306] Teubner G, 'Enterprise
Corporatism: New Industrial Policy and the 'Essence of the Legal Person'
in Daintith T and Teubner G Contract and Organisation: Legal Analysis in
the Light of Economic and Social Theory (Berlin: Walter de Grutyer, 1986)
130, 137.
[307] Ibid 146.
[308] Ibid 145.
[309] Popper KR, Rejections
and Refutations, (London: 3rd ed, 1969) 313-4 and note 4. Dialectic is
based on a Greek expression which may be translated as 'the argumentative
use of language'. Hegel used the term to mean a theory of argument 'which
maintains that something - more especially, human thought - develops in
a way characterized by what is called the dialectic triad: thesis, antithesis,
and synthesis. First there is some idea or theory or movement which may
be called a 'thesis'. Such a thesis will often produce opposition, because,
like most things in the world, it will probably be of limited value and
have its weak spots. The opposing idea or movement is called the 'antithesis',
because it is directed against the first, the thesis. The struggle between
the thesis and the antithesis goes on until some solution is reached which,
in a certain sense, goes beyond both thesis and antithesis by recognising
their respective values and by trying to preserve the merits and to avoid
the limitations of both. This solution, which is the third step is called
the synthesis.'
[310] Posner R, The Problem
of Jurisprudence (Cambridge, Mass: Harvard University Press, 1990) 259.
[311] Mannolini J, 'The Reform
of Takeovers Law - Beyond Simplification' (1996) 14 Company and Securities
Law Journal 471, 478.
[312] Quine continues: 'But
[this] leaves much unsaid. The argument that sustains a paradox may expose
a buried premise or some preconception previously reckoned as central to
physical theory, to mathematics, or to the thinking process. Catastrophe
may lurk, therefore, in the most innocent-seeming paradox. More than once
in history the discovery of paradox has been the occasion for major reconstruction
at the foundations of thought.' Quine WV, The Ways of Paradox and Other
Essays (Cambridge, Mass: Harvard University Press, rev and enlarged ed,
1976) 1.
[313] Hicks JC, 'The Liar Paradox
in Legal Reasoning' (1971) 29 Cambridge Law Journal 275 and Goldstein L,
'Four Alleged Paradoxes in Legal Reasoning' (1979) 38 Cambridge Law Journal
373 who both seek to resolve it by using logical solutions to problems
of self-reference. Quine discusses these solutions. Quine, above n 312,
6-10. Quine WV, Quiddities: An Intermittently Philosophical Dictionary
(Cambridge, Mass: Belknap Press, 1987)145-9.
[314] The circular reference
in Australian corporate law is discussed by Finn PD, Fiduciary Obligations
(Sydney: Law Book Company, 1977) 66. Teubner, above n 306, 147. Teubner
says of this: '(1) the traditional demarcations between the enterprise,
the legal person, and its substratum are to be interpreted as attempts
to avoid self-referentiality in corporation law. Under this smokescreen,
however, self-referentiality was able to make its way into the reality
of the enterprise: (2) If the taboo of self-referential circularity is
broken, the view opens up on a self supporting construction: the 'subject'
(Träger) of the enterprise is the collectivity, constituted as legal
person; the 'substratum' of the legal person is the enterprise personified
as collectivity.' Ibid 148.
[315] Teubner writes: '[L]aw
arises from the arbitrary nature of its own positivity. It is the self-referential
nature of law, the application of legal operations which gives the law
validity. Legal validity cannot be brought in from outside.; it can only
be produced within the law. We can agree with Lumannn and say: 'There is
no law outside the law, therefore no input or output of law in relation
to the social environment of the system.'' Teubner, Bankowska and Adler,
above n 65, 2 quoting Luhmann N, Die Soziologische Beobachung des Rechtes
(Frankfurt: Metzner, 1986) 20 and following. (footnote omitted).
[316] For this reason Teubner
dismisses the major approaches which have been taken to paradox in law:
to deconstruct law to create deviationist doctrines, to elaborate distinctions
to avoid the self-reference or, in his use of autopoiesis permitting circular
references by accepting that self-reference, paradox and indeterminacy
are real problems of society and not just errors in constructing reality
in law. Teubner, Bankowska and Adler, above n 65, 6-10
[317] Ibid 112-3. His solution,
at a high level of generality, relies on 'deparadoxizing paradoxes' by:
'the creative application of paradoxes, in the transformation of the infinite
into a finite burden of information, in the translation of indeterminable
complexity into determinable complexity.' Ibid 12 quoting Luhmann F, 'Autopoiesis
als soziologischer Begriff' in Haferkamp H and Schmid M (ed), Sinn, Kommunikation
und Soziale Differenzierung: Beiträge zu Luhmanns Theorie Sozialer
Systeme (Frankfurt: Suhrkamp, 1987) 320 and 'The Third Question: The Creative
Use of Paradoxes in Law and Legal History' (1988) 15 Journal of Law and
Society 153.
[318] Teubner, above n 306,
152.
[319] Ibid 155.
[320] Quine, above n 312, 5.
[321] Karl Llewellyn observed
considerable ambiguity in the common law. See Llewellyn KN, Jurisprudence,
Realism in theory and practice (Chicago: University of Chicago Press, 1962)
Chapter 6, 'Impressions on the conference on precedent', 116-127. Llewellyn,
above n 96, 77-91.
[322] Twining, above n 168,
242-243.
[323] Ibid 237-239.
[324] Posner, above n 310, 259.
In the Muggletonian sense it does not seem to serve Posner's argument well.
[325] This was further developed
by William Blake following the Muggletonians. Its flavour of contradiction
is caught by the words Blake put into the mouth of the devil, who represented
the God of Reason: 'I tell you no virtue can exist without breaking these
ten commandments ... Jesus was all virtue and acted from impulse and not
from rules.' Fine, above n 281, quoting Thompson EP, Witness Against the
Beast: William Blake and the Moral Law (1993) 51-2.
[326] French retains the concepts,
if not the practice, in the distinction between loi and droit. Goodrich,
above n 25, 164 note 11 translates and quotes Ewald F, L'Etat Providence
(Paris: Grasset, 1986) 433-4: 'The law (loi) was [historically] judged
by the name of a law of law (droit); as if one conceived the possibility
of the control of law (loi) by the law of law (droit). That has disappeared
entirely now: the law of law (droit) is now confounded utterly with positive
law; in place of the classical delimitation of the law of law we find substituted
a study of sources of law. That is law which is stated as law. A formalism
which implies that in place of the control of law by a law of law there
is substituted a control of the constitutionality of laws and the jurist
is forbidden any critical attitude in the name of the law. With regard
to the statement of the law, jurists become technicians, pracitioners of
law which itself becomes ever more technical. Their task is simply to put
the indefinite proliferation of a more and more complex legislative and
regulatory arsenal into order. But it is no longer their task to orientate
us as to the definition of a politics of law. They are no longer the guardians
of the law.'
[327] Maclean, above n 34, 147.
[328] Goodrich, above n 25,
164 quoting Blanchot M, The Space of Literature (Lincoln, Nebr: University
of Nebraska Press, 1982) 99 in which Blanchot describes death as 'the utterly
indeterminate, the indeterminate moment and not only the zone of the unending
and the indeterminate.'
[329] Goodrich, above n 25,
162-3.
[330] Ibid 164.
[331] As Brennan observes: 'The
rules about a company giving assistance in the purchase of its own shares
... do not reflect a canon of personal morality. Indeed, for those who
never lift, pierce or rend the corporate veil, the rules may appear to
run counter to the company's moral freedom to spend its money on whatever
it chooses.' Brennan G, 'Commercial Law and Morality' (1989) 17 Melbourne
University Law Review 100, 103. Brennan appears to echo Schumpeter's observations
on the moral neutrality of property in the company. 'Commercial law, particularly
the law relating to corporations, is not able to draw to the same extent
as some other branches of law upon the support of moral imperatives which
exhibit these characteristics. This is not a defect of commercial law;
rather it is a lacuna in the development of moral imperatives. Why is this?
Many problems of corporate law relate to the exercise of intangible legal
rights. There is not, and perhaps there can never be, a broad consensus
on the morality of acquiring or exercising intangible legal rights. Their
variety and the differing circumstances in which they arise and in which
they operate preclude reliance on any generally accepted standard to govern
their creation and exercise. Similarly, there is no relevant moral imperative
relating to the use of financial power. Since the medieval abhorrence of
usury has been replaced by a search for maximum return on investment, there
is no general moral objection to a person laying out his own money in whatever
way he chooses. Yet much of the law of commerce has to do with the acquisition
and exercise of abstract legal rights and of financial strength.' Ibid
[332] Mason A, 'Corporate Law:
The Challenge of Complexity' (1992) Australian Journal of Corporate Law
1, 4. Baxt refers to similar concerns in corporate law expressed by Dawson
J and Kirby P. Baxt R, 'Opening Address to the 1992 National Corporate
Law Teachers Workshop' (1992) 2 Australian Journal of Corporate Law 6,
8.
[333] Endicott, above n 289,
669, 678.
[334] Balkin, JM, 'Deconstructive
Practice and Legal Theory', (1987) 96 Yale Law Journal 743-786. Balkin.
provides an illustration of the deconstructive technique from the argument
of Atiyah, who is not generally regarded as a deconstructionist, that individual
will or intention should not be a basis for obligation in contract. Balkin
has argued that: 'Lawyers should be interested in deconstructive techniques
for at least three reasons: First, deconstruction provides a method for
critiquing legal doctrines; in particular, a deconstructive reading can
show how arguments offered to support a particular rule undermine themselves,
and instead, support an opposite rule. Second, deconstructive techniques
can show doctrinal arguments are informed by and disguise idealogical thinking.
This can be of value not only to the lawyer who seeks to reform existing
institutions, but also to the legal philosopher and the legal historian.
Third deconstructive techniques offer both a new kind of interpretative
strategy and a critique of conventional interpretations of legal texts.'
Ibid, 743.
[335] O'Neill, above n 2, 157-161.
[336] Ewald notes that Aristotle
explained that legal justice is tied up with the law but that particular
justice is tied up with the individual which requires for a judgment to
be legal, in the sense of just, it must treat equals as equals. Ewald F
'The Law of Law' in Teubner G (ed) Autopoietic Law: A New Approach to Law
and Society (Berlin: Walter de Gruyter, 1988) 36, 47. Sophocles noted the
indeterminacy produced by human laws conflicting with divine laws in Antigone.
Yablon C, Rosenfeld M, 'Autopoiesis and Justice' (1992) 13 Cardozo Law
Review 1681, 1681.
[337] Andrews, above n 288.
Lipton P, 'Has the 'Interested-Director Cloud Been Lifted? A Comparison
Between the US and Australian Approaches.' (1994) 4 Australian Journal
of Corporate Law 239, 250-1. 'Fuzzy Law - A Better Way to Stop Snouts in
the Trough' (1991) 9 Company and Security Law Journal 1442. Finn P, 'Simplification
and Ethics: A Commentary' (1995) 5 Australian Journal of Corporate Law
158.
[338] Bullock, Stallybass and
Trombley, above n 203, 523.
[339] Schapiro BJ, 'Law and
Science in Seventeenth Century England' in Orson R (ed), Science as Metaphor:
The Historical Role of Scientific Theories in Forming Western Culture (Belmont,
Calif: Wadsworth Publishing, 1971) 38, 49-58. The advent of quantum mechanics
also flowed through to other cultural forms. Lukacs J, 'Quantum Mechanics
and the End of Scientism' in Orson R (ed), Science as Metaphor: The Historical
Role of Scientific Theories in Forming Western Culture (Belmont, Calif:
Wadsworth Publishing, 1971) 293. It has been suggested that science is
in an essential way metaphorical or characteristically employs metaphors.
For a discussion of these claims see Leatherdale WH, The Role of Analogy,
Model and Metaphor in Science(Amsterdam: North-Holland Publishing, 1974)
125-171.
[340] Rottleuthner H, 'Biological
Metaphors in Legal Thought' in Teubner G (ed) Autopoietic Law: A New Approach
to Law and Society (Berlin: Walter de Gruyter, 1988) 97, 105-6.
[341] Posner, above n 22, 26-7.
Dewey asserted: 'that law was best seen as an empirical social science.'
Schlegel, above n 22, 8.
[342] Senechal de la Roche R,
'Beyond the Behavior of Law' (1995) 20 Law and Social Inquiry 777, 785
reviewing Black D, The Social Structure of Right and Wrong (San Diego:
Academic Press, 1993). Frankford DM, 'Social Structure of Right and Wrong:
Normativity without Agents' (1995) 20 Law and Social Inquiry 787, 787 reviewing
Black D, The Social Structure of Right and Wrong (San Diego: Academic Press,
1993). Clark wrote of the four stages of capitalism: 'Finally, if we focus
on the mechanisms of change, the way in which the institutions in each
stage emerged seems roughly analogous to the evolution of species by natural
selection. But unlike the random mutation of genes, the origin of the new
varieties of roles and institutions in the later stages are to be found
in conscious perceptions of their efficiency advantages, by those individuals
who played leading roles in initiating examples of the legal rules that
constitute and facilitate them. Once made possible and exemplified, the
new institutional forms were preferentially selected over competing arrangements
by the cumulative decisions of rationally self-interested capitalists.'
Clark RC, 'The Four Stages of Capitalism: Reflections on Investment Management
Treatises (Book Review)' (1981) 94 Harvard Law Review 561, 569. Clark RC,
'The Interdisciplinary Study of Legal Evolution' (1981) 90Yale Law Journal
1238.
[343] Rubin states 'we inevitably
perceive Clark's statements about corporate law as inherently normative,
whether Clark thinks they are or not.' Rubin EL, The Practice and Discourse
of Legal Scholarship' (1988) 86 Michigan Law Review 1835, 1849.
[344] Edward Stevens Robinson
argued that law is 'an unscientific science'. Lawyers are always 'guardians
of outworn ideas'. They prefer to follow and borrow ideas from scientists
and these ideas are generally filtered through the medium of a social science
which can shear them of significant features. Robinson ES, 'Law - An Unscientific
Science' (1934) 44 Yale Law Journal 235, 245-6.
[345] Popper KR, The Open Universe:
An Argument for Indeterminacy (London: Hutchinson, 1982) 125. Tribe LH,
'The Curvature of Constitutional Space: What Lawyers Can Learn from Modern
Physics' (1989) 103 Harvard Law Review 1 uses quantum mechanics to explain
developments in law.
[346] Hook S, 'Necessity, Indeterminism,
and Sentimentalism' in Hook S (ed) Determinism and Freedom in the Age of
Modern Science (New York, Collier, 1961)180, 183. He states that there
'is a pattern of statistical regularity for the swarm of haphazardly moving
photons that enable us to make predictions about their aggregate behaviour
... [T]he individual photon is not casually determined and that, by the
very nature of our attempt to investigate and describe it, it cannot be
...'.
[347] The common law, with its
system of precedent, may be more greatly exposed to such events as the
supporters of a codified Roman law pointed out: 'An argument drawn from
a like case is very weak and fragile; it falls to the ground when the smallest
dissimilitude is found.' Goodrich, above n 25, 180 note 74 quoting Quintilian,
Insitutio Oratorio, 5.2. He notes that this was a point taken up in the
controversy over the superiority of the common law over the civil law in
the seventeenth century and quotes Wiseman's argument against precedent:
'in so many ages, and in such multitude of cases that have occurred, there
has not been one found wholly like another, for indeed the dissimilitude
and difformity that is among ourselves and whole off-spring of man not
in outward form, visage, lineaments, or stature only, but even in our natures,
tempers, inclinations, and humours, also makes all the matters we deal
in, and the actions which flow from us, disagreeing too. Also in other
productions of nature, and the accidents which are commonly ascribed to
chance and fortune, there is such a strange and wonderful variety, that
nothing is acted, produced, or happens like another, but that in some circumstance
or other that does diversify it and make it differ.' Goodrich, above n
25, 180 quoting Wiseman R, Lex Legum, translated as The Law of Laws: Or
The Excellency Of The Civil Law (London: Royston, 1664) 41.
[348] Popper, above n 345, 125.
Popper posits his indeterminacy as a reaction to determinism posited by
Laplace in 1819 in his Essai philosophique sur les probabilités:
'We ought ... to regard the present state of the universe as the effect
of its anterior state and as the cause of the one which is to follow. Assume
... an intelligence which could know all the forces by which nature is
animated, and the states at an instant of all the objects that compose
it; ... for [this intelligence], nothing could be uncertain; and the future,
as the past, would be present to his eyes.' Ibid, xx quoting La Place,
A Philosophical Essay on Probabilities (1951) 4-5. He argues that 'Though
we must ... be metaphysical indeterminists, methodologically we should
still search for deterministic or causal law - except where the problems
to be solved are themselves of a probabilistic character.)' Ibid 149.
[349] Parker D and Stacey A,
Chaos, Management and Economics: The Implications of Non-Linear Thinking
(Sydney: Centre for Independent Studies, 1995) 6.
[350] A member of parliament,
concerned about breaches of fiduciary duty, persuades a minister to introduce
a law penalising company directors who breach their duties. Once enacted
a prosecution is brought by the regulatory agency. It engages a counsel
who persuades a judge that the duty was breached. The judge then imposes
a fine as a penalty. As a result the sheriff's officers come an seize the
director's goods to satisfy the penalty. He sees the chains of relationship
in law breaking down for four reasons. Some of the intermediate relations
may be weak leading to a whole chain breaking down. These relations may
be mixed relations partly dependent on power and other factors so that,
for example, the officer of the regulatory agency involved may not be sufficiently
senior to persuade the senior officers to take action. There may be several
chains between the minister and the citizen. Some of these chains may involve
coercion and persuasion in both directions. Finally the chains may may
take a different route for different citizens, such as where the company
director is the national president of the political party to which the
minister belongs. Sampford C, The Disorder of Law (Oxford: Blackwell, 1995)
231-2. This is borne out by Tomasic's and Bottomley's study of Australian
directors and the actions of regulatory agencies. Andrews, above n 288,
277-8. Grabosky's and Braithwaite's study of the practices of regulatory
agencies also reached similar conclusions.Grabosky P and Braithwaite J,
Of Manners Gentle: Enforcement Strategies of Australian Regulatory Agencies
(Melbourne: Oxford University Press, 1986) 1-2, 10-25. Fisse and Braithwaite
also address regulatory failure in the corporate sector. Campbell D, 'Brent
Fisse and John Braithwaite, Corporations, Crime and Accountability. Cambridge:
Cambridge University Press, 1993' (1996) 5 Social and Legal Studies 549,
549.
[351] Chaos Theory has a number
of definitions in various sciences: 'The larger framework that chaos emerges
from is the so-called theory of dynamic systems. A dynamical system consists
of two parts: the notions of state (the essential information about a system)
and a dynamic (a rule about how the state evolves with time) quoting Crutchfield
JP, Farmer JD, Packard NH and Shaw RS, 'Chaos', Scientific American, (December,
1986) 46, 49 quoted in Merry U, Coping with Uncertainty: Insights from
the New Sciences of Chaos, Self-Organization and Complexity (Westport,
Conn: Praeger, 1995) 11; 'Where chaos begins, normal science ends ... Chaos
Thoery is the theory of postmodern society par excellence. In theory as
in practice, there are no stable enduring clock-like relationships; no
eternal fixed truths, no stable enduring theoretical relationships given
by Nature or God in the world we find when we look closely at it. In chaos
paradigm, all theory is, in the first instance change theory.' Young TR,
'A Metaphysics for the Post-Modern' The Social Dynamicist 2,2 1991 5 quoted
Ibid, 11.
[352] Parker and Stacey, above
n 349, 6.
[353] Lindsay G, 'Foreword'
in Parker and Stacey, above n 349, 18-24. Hayes AW, 'An Introduction to
Chaos and Law' (1992) UMKC Law Review 751, 757-9.
[354] Lindsay, above n 353,
18.
[355] Ibid. Hayes, above n 253,
760 and note 50 refers to one phenomenon familiar to most Australians from
weather reports, the El Nino effect.
[356] Lindsay, above n 353,
26.
[357] Teubner, Bankowska and
Adler, above n 65, 48-9. Teubner writes: 'I think that a theory of legal
evolution has great analytical and practical power if it stops claiming
to be able to explain individual events and concentrates instead on explaining
structural patterns. Evolutionary theory is concerned with - and should
be limited to - how the filter mechanims of variation, selection, and stabilization
interact. Certainly individual events cannot be predicted by structure
alone. Additional explanations are necessary in order to bridge the gap
between structure and events. From the point of view of evolutionary theory,
these appear accidental. Causal analyses of a different kind must come
in. A theory of legal evolution will be able to explain or even predict
general structures of the law. It will not, however, be able to explain
individual legal acts, court verdicts, laws, and administrative acts.'
Ibid 49.
[358] Sampford C, The Disorder
of Law: A Critique of Legal Theory (Oxford: Blackwell, 1989) 203.
[359] Ibid 223.
[360] Ibid 249. In particular
in his chain analysis he notes that the links provide opportunities for
the law to produce an effect quite different from that expected by the
iniator of the action. There is variation in the ability of individuals,
groups and institutions to affect the action of legal officials. There
is the same variation in their ability to affect the appointment to particular
positions. There is conflict between legal institutions which increases,
or reduces, the official's discretion. Some legal institutions have a greater
power than others in achieving the effects of the exercise of law. This
results in the effects of law being 'relatively crude, conflicting incomplete
and nonuniform.' Ibid 252.
[361] Ibid 149.
[362] 'What it offers at this
critical evolutionay juncture is the first interdisciplinary understanding
of bifurcational and transformational change. But to achieve this new understanding
social scientists must understand natural scientific chaos theory, natural
scientists must understand the social scientific potential, and must better
understand how advancements at both levels relates to the overriding evolutionary
challenge.' Loye D and Eisler R, 'Chaos and Transformation' Behavioral
Science (1987) 32, 54 quoted in Merry, above n 351, 11-2. Hayes discusses
related developments in public policy where pure rationality has been unable
to capture reasoning in public policy, Hayes, above n 353.
[363] Scott RE 'Chaos Theory
and the Justice Paradox' (1993) 35 William and Mary Law Review 329, 331
refers to its use in law referring to the metaphor that chaos theory 'concerns
the notion that the laws of the physical world cannot predict what is going
to happen in the future. This is not because the laws are invalid, but
because even when we understand the interactions very well, and even when
the applicable laws are quiet accurate and clear, results in specific cases
can be still impossible to predict - even though recurring patterns are
discernable and remarkably durable. In sum, there is chaos in order, and
there is order in chaos.' Wolfson N, 'Efficient Markets, Hubris, Chaos,
Legal Scholarship and Takeovers' (1989) 63 St Johns Law Review 511. Hayes,
above n 353, 751. Ladeur has suggested that the uncertainty in law should
lead to it being orientated towards 'proceduralizing'. Ladeur K-H, 'Perspectives
on a Post-Modern Theory of Law: A Critique of Niklas Luhmann, 'The Unity
of the Legal System'' in Teubner G (ed) Autopoietic Law: A New Approach
to Law and Society (Berlin: Walter de Gruyter, 1988) 242, 272-6. Kennealy
P, 'Talking About Autopoiesis - Order from Noise' in Teubner G (ed) Autopoietic
Law: A New Approach to Law and Society (Berlin: Walter de Gruyter, 1988)
349, 358.
[364] Parker and Stacey, above
n 349; Merry, above n 349; Sinfonis John G and Goldberg B, Corporation
on a Tightrope: Balancing Leadership, Governance, and Technology in an
Age of Complexity (New York: Oxford University Press, 1996). Sinfonis and
Goldberg, for example, propose a chaos form of corporate management structure,
Ibid 28. They state: 'Chaos, turbulence, white water are all used to refer
to the condition the world is in, and nowhere is that description more
true than in business. In this world, new products become commodities in
months, and technological innovation is history before it takes hold.'
Ibid 23-4. Teubner's use of system theory approaches it a number of places
including an analogy with ecological development. Teubner, above n 239,
1461-2.
[365] There appears to be hidden
complexity in many forms of social life involved in both economics and
companies. Parker and Stacey, above n 349, 7-9.
[366] Buxbaum, who appears to
support Teubners' autopoietic vision, noted that in the US courts were
resisting attempts by shareholders to challenge corporate management on
the basis of reasons coming from law and economics literature. Buxbaum
R, 'Legitimation Problems in American Enterprise Law' in Teubner G (ed)
Juridification of Social Spheres: A Comparative Analysis in the Areas of
Labor, Corporate, Antitrust and Social Welfare Law (Berlin: Walter de Gruyter,
1987) 241, 268.
[367] These are some of the
general arguments used by Roe. Roe MJ, 'Chaos and Evolution in Law and
Economics' (1996) 109 Harvard Law Review 641-668. This is not an entirely
new insight. Historic contingency was used by Harrison, Professor of Jurisprudence
in the Inns of Court, as a justification for students not study legal history.
It would detract from the symmetry, wisdom and scientific correctness of
law as it exists. Harrison F, 'The English School of Jurisprudence III'
(1879) 21 Fortnightly Review 114, 115-6.
[368] Sinfonis and Goldberg,
above n 364, 29 quote Stuart A Kauffman: 'Complex systems constructed such
that they are poised on the boundary between order and chaos are the ones
best able to adapt by mutation and selection. Such poised systems appear
best able to coordinate complex, flexible behaviour and best able to respond
to changes in their environment.'The Origins of Order (New York: Oxford
University Press, 1993).
[369] McQueen, above n 56, 12-13.
[370] Twining W and Miers, How
to Do Things with Rules (London: Weidenfield and Nicolson, 3rd ed , 1992)
320. Stone J Precedent and law dynamics of common law growth (Sydney: Butterworths,
1985) 2.
[371] Twining and Miers, above
n 370, 320
[372] Llewellyn, above n 96,
340.
[373] Rock EB, Saints and Sinners:
The Perculiar Mechanisms of Delaware Corporate Law: Discussion Paper #193
(Philadelphia, PA: Institute for Law and Economics, University of Pennsylvania,
March 1996) 2-6, 63-73.
[374] Hayes AW, 'An Introduction
to Chaos and Law' (1992) UMKC Law Review 751, 767-8.
[375] Sinfonis and Goldberg,
above n 364, at 163 cite M Mitchell Waldrop: 'Control of a complex adaptive
system tends to be highly dispersed ... [It] has many levels of organization,
with agents at one level serving as the building blocks for agents at a
higher level ... [and they] are constantly revising and rearranging their
building blocks as they gain experience.' Complexity: The Emerging Science
at the Edge of Chaos (New York: Touchstone, 1992).
[376] Lindsay, above n 353,
27. Wolfson, above n 363, 511. Wolfson refers in particular to the hypothesis
of Richard Roll, 'The Hubrid Hypothesis of Corporate Takeovers' (1986)
59 Journal of Business 197. Rolls argues that bidders have acted irrationally
in takeovers offering more than the target is worth by erroneously convincing
themselves that their valuation is correct. Ibid 517-26. He notes other
research which also points to irrational behaviour in the stock market
in the context of arguing that the chaos theory provides some explanation
particularly as fractal patterns can be found across a number of markets.
Ibid 527-34. This view of the market supports popular perceptions. These
are stories in the financial section of the Australian newspaper on two
days in January 1997. Stewart reports: 'American investors, undeterred
by the wild swings on Wall Street in recent months and cautious forecasts
from analysts about 1997, having been pouring money into mutual funds at
a record rate so far this year.' Stewart C, 'Investors Throwing Caution
to the Wind' Australian (16 January 1997) 21. Wood asks: 'Is the link between
Wall Street and Australian share markets important for the Australian economy?
The question has particular relevance at the moment, with US share prices
obviously vulnerable to a correction.' Wood A 'Watch Our Wheels Fall Off
If Dow Hits Brakes' Australian (16 January 1997) 21. Adams W, 'All Ords
Piggybacks US to Record' Australian (16 January 1997) 21. Blue reported:
'Since 1990, predictions of a stock slide have been proved repeatedly wrong,
the Dow almost tripling in three years.' Blue T, 'Wall Street in Fear of
Overdue Correction' Australian (27 January 1997) 19. Westfield M, Wall
St Run Near End as Trading Turns Volatile' Australian (27 January 1997)
26. Garran reported the same day: 'The recent slump in the Japanese share
market has fuelled the risk of a financial crisi that could have global
ramifications, according to the Nomura Research Institute. A senior economist
at the Nomura, Mr Nobuya Nemoto, warned ... Mr Nemoto displayed a chart
showing a close similarity between the performance of Japanese markets
after World War I and after the 1980s boom ended. The chart suggested that
if the Japanese market kept following the pattern of the 1920s it would
suffer another substantial fall.' Garran R, 'Japanese Slump Likely to Have
World Wide Ramifications' Australian (27 January 1997) 19.
[377] Lindsay, above n 353,
viii, 68.
[378] Hook, above n 346, 180.