The Equity in Corporate Law

Andrew S. Gold* & Henry E. Smith**

It is no secret that equity is a central part of corporate law.  Yet a fuller appreciation of what equity means for corporate law is still lacking.  This Article offers a new account of corporate law’s equity, showing that it is a kind of meta-law—or law about law—that operates ex post to address polycentric problems, conflicting rights, and opportunism.  As we argue, much of the structure of corporate law—its architecture—is explained by the need for a robust equity that can intervene where needed, while also avoiding the dangers of unconstrained judicial discretion.  Corporate law maintains a careful balance, one that constantly updates, to avoid both pitfalls.  Efforts to strike that balance explain various features of corporate law, including fiduciary duties, the business judgment rule, derivative litigation, the doctrine of independent legal significance, different standards of review, and even the way corporate law has changed.  As we will show, this account also offers something importantly different from conventional theories of corporate law, such as the nexus of contracts approach.  Focusing on the equity in corporate law gives us a distinctive picture of both corporate law and its evolution.

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© 2025 Andrew S. Gold & Henry E. Smith.  Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Professor of Law, University of California, Irvine School of Law (ag‍old@law.uci.edu).

**Fessenden Professor of Law, Harvard Law School (hesmith@law.har‍vard.edu).  The authors wish to thank Ryan Bubb, Vice Chancellor Travis Laster, Paul Miller, Elizabeth Pollman, Gordon Smith, and Julian Velasco for helpful comments on earlier drafts of this Article.  We are also grateful for suggestions from participants in the Fiduciary Law Workshop held at Harvard Law School.  Any errors are our own.