The corporation is not a nexus of contracts: it’s an iPhone

Abstract

The fact that the corporation cannot be constructed solely out of voluntary contract narrowly understood is compatible with the claim that the corporation is ultimately nothing but a form of cooperation among rights-holding individuals. The chapter defends this bottom-up position by shifting attention from contracts to rights, and specifically to the distinction between rights in personam, which are created by contract, and rights in rem, which underpin property and are created by law. Like property, the corporate entity is an architectural component of abstract law, as opposed to a concession of the state. Corporations are effectively mechanisms through which owners exercise their rights, with the implication that corporations do not have any rights of their own. The fact that owners retain residual control rights over assets shows that entity shielding achieved by corporate law does not diminish its owners’ rights in rem.