Private Law Theory

ABSTRACT
Equity, private ordering, and law are the cornerstones of corporate governance. Courts and scholars regularly hold forth on the interaction between them, drawing the lines separating them ever more finely. According to most scholars and judges, fundamental tensions beset these interactions. Among them: Contractarian theory cannot account for mandatory rules of corporate law. Private ordering must yield when it conflicts with judicial authority to make sound public policy. Equitable features of corporate doctrine are in tension with private ordering. Because of this, corporate governance is left to muddle along with no complete theory, forever locked in a battle where law, equity, and private ordering conflict.

The result in Delaware has been the development of a corporate law that is, frustratingly, both inconsistent and rigid. In turn, recent cases spurred a flurry of blunt legislative changes as a rearguard effort to fix it. All this for a corporate law canon where the selling points are supposed to be stability, clarity, and expertise.

This Article proposes a new theory to help resolve the tension: The Corporate Bargain Model. The Corporate Bargain Model reveals that, contrary to the oft-recited tension between them, mandatory corporate law, equitable doctrines, and private ordering are in fact harmonious. Indeed, every corporation, of every shape and size, consists of a unique corporate bargain, which contains all aspects of the parties’ relationships over time. Sound equitable reasoning facilitates private ordering, specifically and importantly, of the tacit or relational kind, by inquiring carefully into the entire terms of that corporate bargain – not just expressly chosen terms, default rules of law, or even curated principles of equity.

Edwards, Martin, Equity, Private Ordering, and Corporate Law (July 14, 2026).