The Texture of Loyalty

This paper examines whether and how reforms in corporate governance structures and practices in the United States may reshape conventional notions of the fiduciary duties owed by independent directors of public companies. The paper identifies two focal points for the evolution of directors\u27 fiduciary duties. First, various reforms in corporate governance assign more specific responsibilities to directors, arguably reorienting directors\u27 loyalty to due discharge of a specified function along with ongoing or residual duties of loyalty owed in more general terms to the corporation and its shareholders. The relationships among these specific duties and more general ones may be complex, as may be the consequences of increased emphasis on work to be done by directors as members of committees in contrast to the board as a whole. Second, reforms in corporate governance imply that a director\u27s duty of loyalty to the corporation and its shareholders requires more than disinterest, narrowly defined. That is, a director\u27s duty is one of fidelity to the interests of the corporation that imposes more than an obligation to refrain from participating in board decisions in which the director has a material financial interest. The paper prefaces discussion of evolution of directors\u27 duties by addressing two more fundamental questions about contemporary corporate governance: what role precisely should be assigned to directors, distinct from a corporation\u27s officers and its other senior executives? And what implications follow for the powers of shareholders? To the extent that directors can reasonably be expected to serve only a relatively formal or vestigial function, an expansion in shareholders\u27 powers may be warranted. Overall, the paper is a study of interrelationships among legal and nonlegal mechanisms that shape expectations for directors\u27 conduct. Although distinct, none operates in a vacuum. Formal structures, definitions, and requirements may shape how directors discharge their responsibilities by focusing directors\u27 attention on their gravity and, by enabling independent directors to function more collegially, facilitating the development of institutions of corporate governance that function independently of senior management. Articulating the content of directors\u27 responsibilities with greater specificity heightens expectations that these responsibilities will be fulfilled. In turn, higher expectations for directors\u27 conduct may serve to legitimate directors\u27 capacity, once elected, to exercise discretion independent of intervention from shareholders

Irrevocable Proxies

This short article explores the circumstances under which the power to vote shares owned by another may be made irrevocable. Irrevocable proxies often serve as integral ingredients within corporate governance arrangements because they serve as mechanisms that enable alliances among shareowners or enhance the holder’s voting power in disproportion to the holder’s residual economic interest in the corporation. The rights and duties of holders of irrevocable proxies are best understood against a background of common-law agency relationships, in which agent and principal always have the power–albeit having contracted otherwise–to terminate their relationship and the agent’s actual authority. Courts in the United States have long recognized the existence of less fragile relationships in which one party holds a power that may be used to affect the legal position of another party but which are not agency relationships as defined by common-law agency. An irrevocable proxy is a prime example. From this vantage point the article identifies potentially problematic governance implications of irrevocable proxies. The article concludes with analysis of a recent opinion from Delaware’s Court of Chancery, In re IAC/Interactive Corp., in which an irrevocable proxy was central to the parties’ governance arrangements

The Fiduciary Character of Agency and the Interpretation of Instructions

This chapter in a forthcoming book justifies the conventional characterization of common-law agency as a fiduciary relationship. An agent serves as the principal’s representative in dealings with third parties and facts about the world, situating the agent as an extension of the principal for legally-salient purposes. A principal’s power to furnish instructions to the agent is the fundamental mechanism through which the principal exercises control over the agent, a requisite for an agency relationship. The agent’s fiduciary duty to the principal provides a benchmark for the agent’s interpretation of those instructions. The chapter draws on philosophical literature on the identity of the self over time to address related characteristics of agency doctrine, including the agent’s duty to interpret instructions and statements of authority in light of the principal’s present wishes as the agent reasonably understands them as well as the principal’s ongoing power to revoke the agent’s authority even when the revocation constitutes a breach of contract

Disloyal Agents

This paper examines the consequences of an agent\u27s breach of the fiduciary duty of loyalty. These consequences are underexplored in academic literature, in contrast to rationales for fiduciary duties more generally. The consequences of an agent\u27s disloyalty are, moreover, not uniform across jurisdictions. The paper begins by differentiating between the meaning and consequences that the law ascribes to agency and its meaning in other academic disciplines, including economics and philosophy. It then considers the extent to which principles derived from contract and tort law can account for the consequences that courts assign to agents\u27 disloyal conduct and concludes that a more complex doctrinal and normative vocabulary is required. The paper focuses more specifically on remedies available to a principal when an agent acts disloyally, then turns to an agent\u27s duty to disclose prior misconduct to the principal and then to the impact of disloyalty on contractual provisions and to the consequence for organizations that carry out agency functions when employees of the organization indulge in self-interested fiduciary transgressions. These specific topics are addressed (often with divergent outcomes) by recent or well-known cases and provide good vehicles for analysis of the implications and limitations of more general questions about the nature and function of the fiduciary of loyalty. In general, the remedies available to a principal when an agent is disloyal are varied, distinctive, and in some respects ferocious, all qualities the paper argues are helpful in understanding the theoretical and functional position of fiduciary duties of loyalty

The First Restatement of Agency: What Was the Agenda?

the paper presents the modern communication technology in wireless network, LTE and WiMAX. The system architectures between LTE and WiMAX network will be shown. In addition, a comparison of the system architecture and the air interface of these two networks will be discussed. The paper further concludes with discussion of these two aspects and gives the short look into the future 4G networks.QC 20141110</p

Defining Agency and Its Scope (II)

Fiduciary law necessarily raises issues of delineation and demarcation, which this paper demonstrates through examples involving common-law agents. Serving as an agent, and thus as a fiduciary, does not necessarily mean that agency law prescribes all duties that the agent owes the principal. The agent may have rights external to the relationship that the agent may exercise, distinct from the duty of loyalty owed the principal. When an agent acts outside the bounds of an agency relationship, the principal’s consent is not requisite to conduct that would constitute disloyalty within the bounds of the agency relationship. The paper illustrates the significance of this point through a series of examples drawn from a range of contexts, including auctions of art objects. Prior scholarship neglects the implications of demarcations that define the scope of an agency relationship and of fiduciary relationships more generically. More generally or theoretically, the paper examines the qualities of fiduciary duty as a default rule, arguing that the relative “stickiness” of the default varies. Agency law contains two different kinds of altering rules—necessary and sufficient conditions to vary a default rule—consisting of agreements that define the scope of the agent’s representative role on behalf of the principal, and consent by the principal to actions by the agent within that scope that relieve the agent of liability for breach of fiduciary duty, which impose significantly different requisites. The basic distinction between agreement and consent has parallels elsewhere in agency law; for example, ratification, like consent, requires specificity because to be legally effective ratification requires that the principal know, as a matter of historical fact, what the agent has done. Agreement, on the other hand, requires less specificity, comparable to manifestations that confer actual authority on an agent which necessarily does not require that the principal foresee all actions that the agent may take that fall within the scope of the grant of authority. And ratification, like effective consent, is a matter of historical fact, not hypothesis. These implications follow because agency law, by positioning an agent as the principal’s representative for purposes of legally-salient interactions with third parties and facts about the world, frames the agent as an extension of the principal, not the principal’s substitute