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How to See the Forest for the Trees: What’s the Point of So Much Corporate Law?*

Author: Paula Darvas BA, LLB(Hons), LLM (Monash)
Lecturer, Department of Business Law and Taxation, Faculty of Business and Economics, Monash University
Issue: Volume 9, Number 3 (September 2002)

*This title and approach is based on a paper by K. Greenfield, "Corporate Social Responsibility: There's a Forest in Those Trees: Teaching About the Role of Corporations in Society" (2000) 34 Ga. L. Rev 1011.

Paper presented at the Australasian Law Teachers' Association annual conference hosted by Murdoch University School of Law, Perth, Western Australia September 29 - October 2 2002.


Contents

    Introduction

  1. The Waterside Workers Dispute, the recent collapse of Ansett and a host of other corporate collapses over the past few years and their catastrophic consequences, illustrate just how significant the corporation is, having far-reaching consequences for the whole community. These events have put corporate law reform on the government's agenda, and corporate activity has increasingly been at the forefront in the media. The people trawling through the remnants of Enron's documentary evidence after its collapse found "a systematic and pervasive attempt by Enron's management to misrepresent the company's financial position".[1] Lewis Lapham goes as far as describing the Enron debacle as "crony capitalism",[2] arguing that this is because "everybody was playing a part here, it wasn't only the government regulatory agencies but the auditors, the lawyers, the investment bank ... Enron doesn't happen in a vacuum" .[3]

  2. This paper is the first attempt by the author to think about how to involve these issues into the teaching of corporate law, particularly to non-lawyers. This is an exercise in 'thinking out loud' about what I teach and how I teach it.[4] An issue for me, personally, is the divergence between what I passionately consider to be exciting about corporate law, and what I actually teach. I have taught corporate law to 'non-lawyers' for over eight years now (mainly as a tutor). I began to wonder whether it is possible when teaching students who will be future accountants and business people, how "many social ills created by corporations stem directly from corporate law".[5] Corporate law rarely incorporates socio-political perspectives: the subject is not often regarded as "a site of political contest",[6] as well as failing to develop "the concept of the corporation as a firm in its social context".[7]

  3. This paper is in three parts. Firstly, this paper argues that corporate law must be taught in the context of its relationship with society and the economy ['a contextualised approach']. This not only reveals my personal bias / viewpoint - that such a 'contextual' approach is essential. This view is not a novel one - it builds upon a debate in the legal fraternity about the role of 'black letter' law as opposed to 'law in context' in legal teaching and research, which is really a debate about how to define legal scholarship.[8] Secondly, I will try to support this view by contrasting a 'black letter' approach and a contextualised approach in two examples: the seminal case of Saloman and Parke v Daily News. I am not saying that corporations are to blame for all the ills in society, but with the increasing power and effect of the corporate form, it must be asked: to what extent should corporate law take 'the public interest' into account? Greenfield cuts through the trees to the "forest" of corporate law by making the following point:

    "while the corporation is a hugely important and successful engine of wealth creation, it can also be an amoral behemoth that fouls the environment, worsens political & economic inequalities, & takes advantage of horrible injustices for its own financial gain".[9]

  4. The final part of this paper will examine techniques put forward by other law academics to reinvigorate the teaching of the subject to law students. I will assess the appropriateness of these suggestions for teaching to commerce students, taught in the second year of a commerce degree, as a compulsory subject.[10]

    The burgeoning subject of 'corporate law': why make room for theory?

  5. Why not? "Linked with the concept of the corporation is the idea of the purpose of the corporation and the question of the interests it serves or should serve".[11]

    "One cannot intelligently discuss whether a corporation is acting responsibly when it shuts down a factory without taking a position on the role of corporations in society".[12]

  6. I usually begin any lecture series in corporate law anecdotally, by stating that the Bubble Act had about 12 or 15 sections, whereas today's Corporations Act has over 1, 500 sections, and takes up a whole shelf or two because it includes regulations connected to the Corporations Act, as well as the body of law connected to the corporate regulator (rules, regulations, and guidelines), as well as a voluminous amount of case law analysing all those statutory provisions. The final anecdote I relate is the fact that a whole government department was devoted to "simplification" of the legislative regime!

  7. A basic corporate law course involves a teacher in having to decide what to leave out, due to the sheer "trees" of rules.[13] The statutory contract between shareholders and management is then examined, as well as dealings between the company and 'outsiders" (agency law issues are applied). Shareholder rights and management's fiduciary duties are also examined in detail. In particular, this approach to the teaching of corporate law explicitly (or even implicitly) provides a 'traditional legal model'[14] of the corporation, where responsibility for corporate decision-making is delineated between the board of directors and the shareholders. The role of the board of directors is ongoing direction and supervision of the management of the affairs of the company,[15] and the role of shareholders is to monitor management. Every commerce student will examine Saloman's case,[16] and be able to state that it establishes the corporation as a legal entity separate from ownership and management, and also be able to identify situations where the corporate veil can be lifted. Courts support of the autonomy of the board of directors to manage the company by viewing the company's constituent documents as forming a contract between the members of the company.[17]

  8. On this traditional approach, the company is formed by a 'free agreement' between the shareholders and office holders,[18] because the shareholders agree to confer the power to manage the company to the board of directors. This means that the general meeting of members cannot override management decisions, but theoretically they are safeguarded by the fact that the board of directors is bound by their fiduciary duty to act in the best interests of 'the company as a whole'.[19] In other words, a corporate law course focuses on identifying the separate legal entity theory and corporate personality, and then examines the relationship between shareholders and directors, and then between directors and 'outsiders'.

  9. However this concept of 'the company as a whole' historically has not extended to taking the interests of any 'outsiders', such as workers or the wider community into account. The case of Parke v Daily News is usually raised to illustrate this. The relegation of employees to 'outsiders' reflects the contractual foundation that explicitly underpins the traditional legal model of the corporation.[20] It also reflects an economic conception of the corporation, where management's primary objective is profit maximisation on behalf of the shareholders.[21] The constraints of the market supposedly force managers to act 'as if they have the shareholders interests at heart' " .[22] Management's primary role, therefore, is to get on with the business of profit maximisation - not cater to broader societal impact.

  10. Current corporate law practice is challenging the 'heuristic' adequacy of the traditional model of the corporation in corporate law theory,[23] and raising broader questions about the role of the corporation in society.[24] This is not raised in a 'basic' corporate law course. For this reason, the teaching of corporate law has been criticised for being intellectually shallow, doctrinally based and basically boring.[25] The piecemeal and fragmented nature of corporate law reform has also been criticised.[26] The traditional way of teaching the subject 'neutralises' the impact of corporate law, as well as "influences and defines what corporate law is and what we think it should be".[27] This doctrinal way of teaching does not make explicit "the fundamental ideology of corporate law, [that shows] the bigger picture of how we view corporations and why, or whether, we consider them important".[28]

  11. The traditional legal model takes a certain view of corporate law without making the rationale explicit. There is also a growing body of work that highlights how large, publicly listed corporations are "as much a political adaptation as an economic or technical necessity".[29] Roe, for example, argues that there are organisational alternatives to the corporate governance structure resulting in fragmented ownership and control,[30] and Greenfield highlights the fact that other 'advanced countries are more rigorous in regulating even the internal affairs of corporations".[31]

    'Contextualising' traditional corporate law cases

    "Companies believe their duty to the public interest consists of complying with the law. Obeying the law is simply a cost. Since it interferes with making money, it must be minimized [sic] - using devices like lobbying, legal hairsplitting, and jurisdiction shopping. Directors and officers give little thought to the fact that these activities may damage the public interest."[32]

    "laws governing corporations are arguably part of the [economic] system's flaws".[33]

  12. The very first concept that students are introduced to in the course is that of the separate legal personality of the corporation. Saloman's case is used to illustrate this. It is a situation where the owner of the business sold it to a corporation and then to raise further finance, borrowed from a moneylender who took debentures over the business in return. When the company became insolvent, the moneylender wanted to recover the amounts owing from Saloman personally. The courts confirmed that Saloman was not personally liable, that his company was a separate legal entity from him individually, so that this claim of the moneylender was not upheld. I had always wondered what the outcome of this case would have been, if it came to the courts today. Professor Sealy, wrote an article in the Federal Law Review, analysing the case from this perspective. The result meant that the outcome may have been different today. Relation back provisions in insolvency would apply, as well as the fact that the debenture to a director would lose preference. Another way to 'contextualise' this problem, is to look at it from the point of view of this company operating in a corporate group, owned and controlled by Saloman individually, but with 'dummy' directors and shareholders [or a single director shareholder company, which is possible today], and with all assets transferred from the original company to another, which remains solvent. Through the 21st century filter, these examples illustrate the 'sea change' in corporate law, without proselytising about wider corporate social responsibilities. Within the traditional legal model, these examples show how the outcome could be different today.

  13. The classic case of Parke v Daily News Ltd[34] also illustrates the traditional approach. A publishing company ran two newspapers and was going to close one down. Shareholders objected to management's decision to provide a bonus payment to each of the ex-employees as compensation for dismissal. One shareholder challenged the power of the directors to make this payment in court. The court held that these were gratuitous payments to the detriment of the shareholders and the company as a whole. The distinct wage-work relationship of the ex-employees was not recognised. The will of the shareholders as 'insiders' was the primary consideration of management when carrying out their duties: workers as 'outsiders'[35] were not considered.[36] Professor Hill points out that with new EC directives in place, this may not have been decided in the same way today.[37]

  14. Can we go so far as arguing that corporate law today is not adequate to regulate the current socio-economic environment? The way that business is organised and managed has changed. Corporations have, as part of their normal commercial practice over the last 15 years or so, engaged in corporate restructuring on a massive scale, both in the private sector and the government sector. This inevitably involves 'downsizing' the workforce and implementing 'flexible employment contracts and leaner management systems'.[38] This has been part of the process of 'vertical disintegration' where large conglomerates have gradually been disaggregated. This allows a corporation to outsource sections or components of its business in an effort to increase efficiency and (international) competitiveness, but this is not recognised in corporate law. In other words, the fact that only one business may be involved in a corporate restructure is ignored in corporate law: the commercial reality is that often a business is "conducted collectively by interlinked companies under common ownership and control".[39]

  15. The highly politicised Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [the Patricks case][40] and the recent case of McCluskey v Karagiozis[41] highlight fundamental problems in company law theory and practice relating to the treatment of corporate groups, that is - a group of companies 'organised as a commercial enterprise',[42] in the context of a voluntary administration and the loss of employee's accrued rights and entitlements. Problems arises because of the application of the principle of separate legal entity established in Saloman's case, so that each corporation in a group is considered to be a separate and distinct legal entity. Even if funds are dealt with in a common manner, creditors only have recourse to the individual company that owes them money, unless a limited array of exceptions to the separate corporate personality principle can apply. The Company and Securities Advisory Committee in a recent report that focuses on the legal issues that arise from corporate groups[43] recognises that "[t]he voluntary administration provisions are not specifically tailored to deal with the possibility of simultaneous corporate group administrations".[44] They propose changes to the law on voluntary administration "to specifically accommodate corporate group reorganisation."[45]

  16. This also raises the concept of 'corporate social responsibility, that is - acts of the corporation which "impose costs on the shareholders, when performed for the purpose of aiding some other group or society as a whole".[46] The broader question of 'the degree to which 'internal' regulation of corporations can form part of a trend towards adhering to principles of corporate social responsibility"[47] can then be raised, as well as trends in other jurisdictions to implement 'external' regulation.

  17. An example of the significance of the movement towards examining the societal impact of corporations is the fact that several jurisdictions around the world have advocated greater disclosure of the degree of compliance of corporations with matters that go beyond the bottom line to broader issues of corporate social responsibility,[48] labelled the 'triple bottom line'. The "Canadian Democracy and Corporate Accountability Commission" ["the CDCAC"],[49] for example, was established in an attempt to "blunt corporate power"[50] in a similar way to the development of regulatory commissions and anti-competition laws in the US from 1890 to 1914.[51] In their final report the Commission established that 74% of Canadians, and a significant percentage of Canadian shareholders, want business executives of corporations "to take into account the impact their decisions have on employees, local communities and the country as well as making profit". The CDCAC's recent report, The New Balance Sheet: Corporate Profits and Responsibilities in the 21st Century ["The Report"], draws together the abundance of recent academic work critical of the 'traditional legal model' of the corporation, as well as providing some concrete set of factors that moves beyond 'stakeholder' rhetoric to a practical blueprint for reform.

  18. Although the Report makes wide ranging recommendations for reform, cutting across the political and legal spheres at both a national and international level, and addressing specific areas for regulatory change, the focus here is on the proposals related to the role we play as teachers in legal education. Business schools were identified as crucial in inculcating a culture of 'corporate social responsibility' in today's students, who would be tomorrow's business leaders.

  19. Note that this issue is not new. As early as 1928, Berle and Means accepted that the corporation is 'a major social institution'.[52] Although they did not explicitly argue for a socio-political conception of the corporation, they considered it 'the work of a lifetime' to further study its effect on workers and consumers of the corporation's products.[53] They called for analysis of the corporation in terms of social organisation, drawing an analogy between "the concentration of religious power in the mediaeval church or of political power in the national state".[54] The modern version of this approach is 'stakeholder' capitalism, where boards of management take a broader range of interests into account.

  20. However no theorist (to my knowledge) has successfully advocated any particular 're-vision' of the corporation and there is a dangerous elasticity to this metaphorical 'stakeholder' concept.[55] Farrar points out that there is no consensus as to whether it is "a legal concept, a moral concept or simply a loose term of managerial theory".[56] This descriptive metaphor masks the normative question of who the stakeholders should be, and the associated problems with answering this question, particularly in the context of the interests that directors should take into account in governing the corporation. The possibility that the corporate managers may have to move beyond the interests of the shareholders as a whole and take such a diffuse range of interests into account that governance of the corporation becomes unworkable should not deflect business school educators from highlighting the wider socio-political effects of corporate decision making. Also, a socio-political conception of the corporation "accommodate[s] a number of important contemporary changes in the commercial world better than any other"[57] conception.

    How do you make room for theory? Practical Constraints

  21. Do we need to take into account unionists, environmentalists and other political activists - are they merely "bands of vigilante groups ... [that] have banded together and taken advantage of our corporate laws ....".[58]

    "What mark did I get for my assignment? Is it on the exam?" Anon

  22. In relation to this part of the paper, I will ask more questions than provide answers. I have mapped out a list of aspects of this approach that could be problematic.

  23. The first set of constraints relates to the task of 'contextualising' the corporate law course. A threshold concern is 'in the context of what'? What are the key issues? How do you provide 'colour and flavour' without proselytising to the students? In a compulsory subject, is anecdotal evidence enough? Do you make books critical of corporate conduct compulsory course reading? Do you take a critical legal theory approach, or a 'law and economics' approach, or a sociological approach? In other words, opening the 'floodgates' to legal theory may lead to the dissolution of the corporate law aspect of the course.[59]

  24. The second constraint directly related to the first, that is - the problem of definition in relation to the scope of what would be included within the 'contextualised' corporate law course. It relates to the choice or categorisation of legal issues missing within the corporate law course currently taught to commerce students. In my view the following are important, but it is by no means an exclusive list:

  25. A third type of constraint is a very practical one, related to student receptivity to this approach. Given that corporate law is a second year compulsory law subject, the hard question arises: Can we go as far as hoping that in each non-law student we can foster 'a critical dialogue on law and justice in a rapidly changing world'?[62]

  26. In a first year 'business law' course, the teaching focuses on facilitating strategic problem solving skills, as well as identifying legal issues, without necessarily coming up with a solution. It may be difficult for students learning about the current regulatory regime to also be provided with an overview of the challenges facing it. The approach of some students can also be problematic, particularly when they simply want to know what is on the exam. The final set of constraints are resource based: "New ideas for teaching methods, subject material or varied curriculum will inevitably have to be considered in light of restrictive resource allocations and student demand".[63]

  27. Despite these limitations, there are several opportunities to enrich the studies of a non-law student in corporate law. Anecdotal statements peppered throughout a 'black-letter' approach to the course are not sufficient. The issues need to be examined at the very start of the corporate law course, so that students can see how the analysis of corporate law problems "involves a process of adopting positions on important political, social and philosophical questions".

    Sketching the forest - How to see a way through the trees

  28. The approach I currently use is an anecdotal one, peppering my lectures with Enron jokes and choice transcripts from the HIH Royal Commission, as well as strongly worded critiques of corporate conduct. Debates in the Financial Review are also useful, and labelling the 'related party transactions' provisions 'the Skase provisions'. Joking aside, there are several other strategies available.

  29. Firstly, it may be possible to devise a project / assessment task involving literature setting out the issues considered vital to broadening out the scope of corporate law. For example, the Australian Conservation Foundation has released a discussion paper [six pages, plain English - only one footnote!!!],[64] which could be used as a basis for a critical dialogue on the role of the corporation in society. The paper simply and effectively states a case:

    "Corporations are by far the most common vehicles used to carry on business activity both in Australia and around the world. They have become so because governments have legislated to provide corporations with various incentives, rights and privileges ...
    Whilst governments have successfully used the law to create a legal framework favourable to corporate growth, they have been less reluctant to use the law to regulate corporate behaviour. This is because most western governments of today pursue a free market ideology. Underpinning this ideology is the notion that the market place, in which corporations operate, is best left largely unregulated or self regulated.
    Against this backdrop of special legal privileges and limited regulation, corporations have become large and powerful ... the economies of individual companies are now larger than many nation states ...
    The growth of corporations is not in itself a bad thing ... what has emerged as a problem is the impact of unregulated corporate growth on the environment and the community."[65]

  30. The discussion paper also proposes a variety of concrete regulatory reforms, involving the strengthening of Australian and international law to regulate the social and environmental performance of companies. This would incorporate an international law component into the corporate law course. This could be contrasted with a view of the Business Council of Australia to the Corporate Code of Conduct Bill, or perhaps to contrast submissions to the Senate Committee reviewing the Corporate Code of Conduct Bill. A short article in the Business Review Weekly entitled "Fuzzy Law: A Better Way to Stop Snouts in the Trough" could introduce a regulation debate. This, arguably, is what corporate law teachers are already doing, but perhaps the bigger picture is clouded by the number of trees converted in the sheer volume of material students have to learn!

  31. Two American law teachers take innovative approaches that may also be appropriate for commerce students. Greenfield suggests a certain American case study be integrated into the curriculum that raises broader societal questions. He uses the case of Local 1330 v United States Steel Corp,[66] where management lied to workers and said that a plant would not close down, and subsequently closed the plant. The laid off workers argued that the plant owners were estopped from going back on their word. This was not successful, but it does raise another way of looking at the interests affected by corporate law because the law views lying to workers as allowable. We could use the Patricks' case, in a similar way in relation to the current position on corporate restructuring. His Honour Callinan J pointed out that the prior reorganisation of the Patricks group of companies was not in contravention of the [then] Corporations Law[67] and his Honour refused to become "enmeshed in the business of the parties.[68] The approach of Callinan J was to focus on current commercial practice to the extent that: "[t]here is no obligation upon any person or corporation to remain in a particular business so long as each takes proper care of his or her legal obligations in going out of it",[69] and that corporations "are entitled to discontinue their business and use their capital and effort elsewhere."[70]

  32. Graeme Orr observes that: "Whilst technically the legal entities the employees served did not change, the nature of the business and the viability of those companies did, without the employees' knowledge."[71] A labour supply company became the new employer, even though the employees worked for another company (they were originally employed directly by). The corporate re-structure in the Patricks case created the illusion (from an employment law perspective) that the business was not a going concern, effectively allowing the employer to avoid labour costs. The crux of the problem is a question of balance: to have regulation facilitating flexibility and improved corporate efficiency, but at the same time preventing "employer strategies to evade labour regulation and costs".[72]

  33. Finally, Krawiec builds her entire course around "the theme of the interaction among the various groups that form the corporate enterprise".[73] She begins with the example of a two people running a company (a winery). Getting the class to consider five common means by which the owner may wish to prevent the employee from shirking canvasses techniques of regulation.[74] She then extrapolates to the large public company.

    Conclusion: What is corporate law good for?

  34. As the pace of change in national and global socio-political conditions in the 21st century accelerates, the question of the adequacy of our pedagogical techniques to equip our students with the context within which corporations operate becomes more pressing. Stokes considers that checks on managerial power have failed, so that tinkering with the internal division of power is not likely to ensure that the power of managers of large public companies are suitably constrained, and plants the seeds of a solution outside the traditional legal model of the corporation. This view can be supported by the growing number of people concerned with 'the existing degree of responsibility corporations should have to the societies within which they operate'.[75]

  35. Macmillan Patfield considers that "unless society determines what it is trying to achieve by the law on companies that law will not be able to rise to the challenges presented to it".[76]

  36. Farrar accepts that corporations have rights, but proposes "some concomitant social obligations as the price to be paid for recognition of those rights".[77] He advocates a philosophical "approach to the rights and duties of individuals in society ... predicated by a basic principle of reciprocity".[78] This paper, therefore, has built a case for integrating a 'contextualised' approach to teaching corporate law to commerce students.

  37. This approach is clearly predicated on the assumption that "the legal order is not isolated from the social [and / or political] order of which it is a part"[79] and I have tried to justify my view that corporate law teachers must go beyond a narrow focus on the rules (that focus on the internal relation of the members within a company and with outsiders) - the "trees" of corporate law, and say something "about the legitimacy of corporate power in relation to society generally",[80] the "forest" of corporate law. This paper has taken two specific problems to illustrate how a traditional 'black letter' method of teaching fails to adequately present the wider socio-political concerns, particularly by showing how cases decided earlier last century would have a different outcome today, as well as sketch out certain directions taken. The compulsory nature of the course should not prevent students who have "no genuine interest in the subject matter"[81] from an enriching experience.

Notes

[1] Stan Correy (producer) Enron: The Musical, ABC Radio National Transcript, Background Briefing, Feb 17, 2000 [<http://www.abc.net.au/rn/talks/bbing/stories/s484011.htm> last accessed 30/10/02]

[2] Ibid.

[3] Ibid.

[4] Note that the focus of this paper is not on the expanding body of research in the area of teaching and learning in tertiary education. Eg - M Le Brun and R Johnstone, The Quiet (R)evolution: Improving Student Learning in Law (1994) Sydney, Law Book Company.

[5] R. Hinkley, "How Corporate Law Inhibits Social Responsibility" (2002) The Humanist 26, 26.

[6] D. Wishart, "The Politicization of Corporate Law Reform", paper delivered at the 2001 Corporate Law Teachers Conference.

[7] J. Farrar, "Frankenstein Incorporated or Fools' Parliament? Revisiting the Concept of the Corporation in Corporate Governance" (1988) 10 Bond LR 142 at 142.

[8] B. Cheffins, "Using Theory to Study Law" (1999) 58:1 Cambridge Law Journal 197 at 198.

[9] K. Greenfield, "Corporate Social Responsibility: There's a Forest in Those Trees: Teaching About the Role of Corporations in Society" (2000) 34 Ga. L. Rev 1011p 1014. See, for example: W. Greider One World Ready of Not: The Manic Logic of Global Capitalism (1998) Touchstone Books, Englewood, USA, and Amnesty International Corporate Social Responsibility Group, links page: [http://www.pcblues.com/crg/] (last accessed 7/10/02]

[10] For some students, however, they are provided with a brief two-week overview of the subject as part of an introductory first year commercial law subject. This is not within the scope of this paper.

[11] J. Farrar, Corporate Governance in Australia and New Zealand (2001) Oxford University Press, Melbourne, p 4.

[12] K. Greenfield, "From Rights to Regulation in Corporate Law", chapter 1, F. Macmillan Patfield (ed) Perspectives on Company Law: 2 (1997) Kluwer Law International, London, p 2.

[13] K. Greenfield, supra, p 1014. Goldsmith points out, interestingly, that what counts as legal knowledge is a 'profoundly political' question: A. Goldsmith, "Legal Education and the Public Interest" (1998) 9:2 Legal Education Review 143.

[14] This term is taken from M. Stokes, "Company Law and Legal Theory", contained in Wheeler S. (ed) The Business Enterprise: A Socio-Legal Introduction (1994) Oxford University Press, New York, pp 88 - 93, and 103 - 113.

[15] Section 198A of the Corporations Act.

[16] Saloman v Saloman & Co [1897] AC 22. See the Federal law review - 100 years after Saloman, special set of papers.

[17] Automatic Self-Cleansing Filter Syndicate v Cunninghame [1906] 2 Ch 34. M. Stokes, supra n 14, p 87.

[18] M. Stokes, supra n 14, p 89.

[19] Re Smith and Fawcett Ltd [1942] Ch 304.

[20] M. Stokes, supra n 14, p 89. See also section 140 of the Corporations Act. The 'law and economics' view of ordering the workplace is succinctly summarised by Gottesman: M. Gottesman, "Whither Goest Labor Law: Law and Economics in the Workplace" (1991) 100 Yale Law Journal 2767.

[21] Note that 'second wave' law and economics scholars question this primary objective. See, for example: M. Richardson and G.Hadfield (ed) The Second Wave of Law and Economics (1999) Leichhardt, N.S.W.: Federation Press; R. Posner, The Problems of Jurisprudence (1990) Harvard University Press, Cambridge, Massachusetts, chapter 12, "The Economic Approach to Law", pp 353 - 422.

[22] J. Hill, "Changes in the Role of the Shareholder", chapter 10, contained in R. Grantham & C. Rickett (ed) Corporate Personality in the 20th Century (1998) Hart Publishing, Oxford, pp 175 - 208, at p 191, citing Butler, "The Contractual Theory of the Corporation (1989) 11 Geo Mason U L Rev 99, at 122.

[23] See, for example, J. Farrar, supra n 11; M. Stokes, supra n 14; and J. Hill, "Public Beginnings, Private Ends - Should Corporate Law Privilege the Interests of Shareholders" (1998) 9 Australian Journal of Corporate Law 21.

[24] See, for example, the Commentary By Labor Members on the Corporate Code of Conduct Bill 2000.

[25] M. Stokes, supra n 14. Some text books have tried to 'contextualise' the course: D. Wishart, Company Law in Context (1994) Oxford University Press, Melbourne; and Berns S. and Baron P., Company law and Governance: an Australian Perspective (1998) Melbourne, Oxford University Press.

[26] Dimity Kingsford Smith and David Wishart.

[27] K. Hall, "Theory, Gender and Corporate Law" (1998) 9:1 Legal Education Review 31, 34. See also: B. Cheffins, supra n 8.

[28] K. Hall, "Theory, Gender and Corporate Law" (1998) 9:1 Legal Education Review 31, 34.

[29] Professor Farrarr, for example, provides a brief thematic history of corporate governance, illustrating different models: J. Farrar, supra n 11, pp 7 - 19.

[30] M. Roe, "A Political Theory of American Corporate Finance" (1991) 91 Colum. L. Rev 10. Whitley, The Three Worlds of Welfare Capitalism.

[31] Greenfield, supra n 9, 1011 at 1018.

[32] R. Hinkley, supra n 5, 27.

[33] Greenfield, supra n 9, 1011 at 1017

[34] [1962] Ch 927.

[35] This terminology is adopted from J Hill and J Riley, "Corporate Theory and the Role of the Employee: A Case Study of National Textiles", paper presented at the 11th annual Corporate Law Teachers Conference, Victoria University of Technology, 12 February 2001.

[36] Note that this was an unusual situation where the interests of the shareholders as a majority diverged from that of the interests of the ex-employees. This situation can be contrasted with a situation where continuing employees are paid a bonus. This could be in the best interests of the company as a whole because it would, arguably, improve workplace relations and employee productivity.

[37] J. Hill, "At the Frontiers of Labour Law and Corporate Law: Enterprise Bargaining, Corporations and Employees" (1995) 23 Federal Law Review 204.

[38] R Callus & R Lansbury, Working Futures: The Changing Nature of Work and Employment Relations In Australia (2002) The Federation Press, New South Wales, p 233.

[39] P. Blumberg, The Multinational Challenge to Corporation Law (1993) Oxford University Press, New York, at p ix.

[40] (1998) 153 ALR 643. This was a majority joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ who ruled in favour of granting an interlocutory injunction to prevent the dismissal of the existing workforce (Callinan and Gaudron JJ dissenting). The sacked employees worked for four "employer" companies, and the Maritime Union of Australia represented the employees. This is commonly referred to as the waterside workers' dispute.

[41] [2002] FCA 1137. Merkel J, single judgment in the Federal Court [McCluskey].

[42] B Baxt "Corporate Law Reform in Practice" (1998) Company Director 31.

[43] Company and Securities Advisory Committee Corporate Groups (December 1998), para 5.54 to 5.58.

[44] Company and Securities Advisory Committee Corporate Groups (December 1998), para 5.54

[45] Company and Securities Advisory Committee Corporate Groups (December 1998), para 5.55.

[46] K. Greenfield, supra n 12, p 6, footnote 22. It is, however, a contested notion: H. Glasbeek, "Corporate Social Responsibility - Using the Maginot Line to Save Capitalism" (???).

[47] K. Greenfield, supra n 12, p 1.

[48] See, for example, the final report of the Canadian Democracy and Corporate Accountability Commission, The New Balance Sheet: Corporate Profits and Responsibilities in the 21st Century (January 2001). Details regarding this Commission are available at : http://www.corporate-accountability.ca/. This includes a project description, executive summary and full English Version of their discussion paper, as well as links to details of hearings and events [Last accessed Wednesday, March 13].

[49] Ibid.

[50] J. McCahery, S Picciotto and C. Scott, "Introduction: Corporate Control: Changing Concepts and Practices of the Firm", p 1 - 22, at p 2, contained in S Picciotto and C. Scott (eds) Corporate Control and Accountability: Changing Structures and the Dynamics of Regulation (1992) Oxford University Press: Oxford.

[51] J. McCahery, S Picciotto and C. Scott, supra n 50, at p 2, citing, inter alia, M Sklar The Corporate Reconstruction of American Capitalism 1890 - 1916 (1988) Cambridge: Cambridge University Press.

[52] A. Berle and G. Means, supra n 30, p 5. They also stated that this particular academic work was limited to "the relation which corporations bear to property": at p viii.

[53] A. Berle and G. Means, The Modern Corporation and Private Property (1976), p viii.

[54] A. Berle and G. Means, supra n 53, p 352.

[55] R. Green, "Shareholders as Stakeholders: Changing Metaphors of Corporate Governance" (1993) 50 Washington & Lee Law Review 1409, who states at p1409: "Metaphors are unavoidable but dangerous components of human thought".

[56] J. Farrar, supra n 11, p 150.

[57] J. Hill, supra n 22, p 189.

[58] Minister for Financial Services and Regulation, Joe Hockey, Press Release No. FSR/083, dated 18/12/00.

[59] M.Davies, Asking the Law Question: The Dissolution of Legal Theory (2002) Lawbook Co, Pyrmont, NSW.

[60] Comments by Labor Members on the Corporate Code of Conduct Bill 2000 [minority report], Parliamentary Joint Statutory Committee on Corporations and Securities, Report on the Corporate Code of Conduct Bill (June 2001), Parliament of the Commonwealth of Australia.

[61] I am grateful to Peta Spender for raising this issue with me.

[62] M Le Brun and R Johnstone, The Quiet (R)evolution: Improving Student Learning in Law (1994) Sydney, Law Book Company

[63] Vivienne Brand, "Decline in the Reform of Law Teaching? The Impact of Policy Reforms on Tertiary Education" (1999) 10:2 Legal Education Review 109, 140.

[64] Australian Conservation Foundation, Corporate Environmental and Social Responsibility: A Law Reform Approach (2002, August) Discussion Paper, Fitzroy, Victoria, copy on file with author.

[65] Australian Conservation Foundation, Corporate Environmental and Social Responsibility: A Law Reform Approach (2002, August) Fitzroy, Victoria, p 2.

[66] 631 F.2d 1264 (6th circuit 1980).

[67] Ibid, p 691.

[68] Ibid, p 706.

[69] Ibid, p 709.

[70] Ibid, p 709.

[71] G Orr "Conspiracy on the Waterfront" (1998) 11 AJLL 159, 161.

[72] R Mitchell, J Murray and A O'Donnell, 'Labour Law and a New Social Settlement', Growth No 49 (2001), Committee for Economic Development of Australia, Melbourne, p 69. Another way to phrase the issue is: 'can labour law, at least in part, be utilised as a tool for facilitating and protecting commercial or business objectives?": F. von Prondzynski, "Labour Law as a Business Facilitator", Chapter 5, contained in H. Collins, P. Davies and R. Rideout (eds) Legal Regulation of the Employment Relation (2000) Kluwer Law International, p 99.

[73] K. Krawiec, "Fundamental Themes in Business Law Education: Building the Basic Course Around Intra-Firm Relations" (2000) 34 Ga. L. Rev 785, 785.

[74] Krawiec, p 789 -794

[75] Canadian Democracy and Corporate Accountability Commission, The New Balance Sheet: Corporate Profits and Responsibilities in the 21st Century (January 2001), Appendix C. The Commission's web site and all relevant documents can be located at: http://www.corporate-accountability.ca/ [last accessed 6 March, 2002].

[76] F. Macmillan Patfield, "Challenges for Company Law", contained in chapter 1 of F. Macmillan Patfield (ed) Perspectives on Company Law: 1 (1995) Kluwer Law International: London, p 1, p 3.

[77] J. Farrar, supra n 11, p 161. This is a similar conclusion to that in the report of the Canadian Democracy and Corporate Accountability Commission, discussed earlier in this article.

[78] J. Farrar, supra n 11, p 161.

[79] B. Cheffins, supra n 8 at 201.

[80] M. Stokes, supra n 14, p 89. See also J. Farrar, supra n 7, 161 - 162, who describes this as "public or welfarist conceptions of the corporation: p 143.

[81] Krawiec, p 807.

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