The Notion of Trust as a Comprehensive Theory of Contract and Corporate Law: A New Approach to the Conception that the Corporation Is a Nexus of Contract


The paper argues that the concept of trust is inevitably latent in every contractual relationship, and is best understood as a comprehensive theory and justification of contract law as both trust and contracts (more than any other legal action) are aiming toward the same universal goal of cooperation, risk-taking, and fulfillment of reasonable expectations. Contract law, per se and through its “good faith” doctrine, could then function as an expressive, coercive, and thus corrective legal tool, serving to symbolize, build, and internalize a culture of trust wherever it has failed to develop. Accordingly, while viewing the corporation as a nexus of contracts and as a voluntary organization based on cooperation and consent, trust can thus function as an axis that best fits corporate law, and also serves to justify it.


Business Organizations Law | Contracts

Date of this Version

March 2005