Professor Ribstein: Ryan v. Lyondell--Another Example of "Corporate Indeterminacy"
Professor Larry Ribstein posits here, in response to Professor Bainbridge's recent commentary on Ryan v. Lyondell, here, that Ryan is among other things another example of "corporate indeterminacy", as compared to the greater certainty that can be achieved via contractual provisions in an LLC context. (See my summary of the Ryan decision here.) Professor Ribstein has written extensively on this topic. An excerpt of his current post follows:
My contribution to the debate, The Uncorporation and Corporate Indeterminacy, argues that corporate indeterminacy is inherent in the regulatory nature of corporate law. By contrast, the law of unincorporated firms, particularly including Delaware's law on this subject, features clear enforcement of customized contracts.
This difference between corporations and uncorporations was demonstrated recently in the Delaware Supreme Court’s Wood v. Baum, which I recently discussed on the Harvard blog. So as I commented on my own blog in response to Ryan:
It’s increasingly looking like the best and maybe only chance for managers to comfortably avoid liability, or at least a messy trial, is in an unincorporated firm.
