Accessory Disloyalty: Comparative Perspectives on Substantial Assistance to Fiduciary Breach

Culpable participation in a fiduciary\u27s breach of duty is independently wrongful. Much about this contingent form of liability is open to dispute. In the United States, well-established general doctrine defines the elements requisite to establishing accessory liability, which is categorized as a tort and often referred to as aiding-and abetting liability. What\u27s controversial is how the tort applies to particular categories of actors, most recently investment banks that advise boards of target companies in M&A transactions. In the United Kingdom, in contrast, accessory liability in connection with a breach of trust or fiduciary duty is controversial because the law is less clear, at least in part due to significant shifts in doctrine within a relatively short period of time. And equity houses the wrong, not tort (and the requisites for aiding-and-abetting liability in connection with a tort are significantly different). This essay, written as a contribution to a forthcoming book, uses contrasts between law in the US and the UK to deepen its examination of this distinctive form of wrongdoing. The essay\u27s central claim is that how the law categorizes a wrong matters for the elements of accessory liability. That is, breaching a fiduciary duty and culpably assisting in the fiduciary\u27s breach are both instances of wrongful conduct. Characterizing both as tortious, as does US law, has consequences for the elements of accessory liability. The comparative account also illustrates the independent character of accessory liability, underscored by outcomes in both jurisdictions in which the accessory\u27s culpability differs from that of the fiduciary as primary wrongdoer

Agency in the Alternatives: Common-Law Perspectives on Binding the Firm

This chapter in a forthcoming book examines the external aspects of agency law in the context of unincorporated firms, that is, the capacity of actors associated a firm to bind it to the legal consequences of interactions with third parties. The chapter focuses in particular on the impact of acts done by a representative for which the representative lacked actual authority. The chapter differentiates the terminology and concepts associated with partnership law from the common law of agency, in particular, a partner\u27s capacity to bind the firm albeit the partner lacks actual authority, which the chapter terms the partner\u27s positional power. Turning to LLCs, the chapter argues that basic agency issues are muddled, due in part to a historically explicable overhang of partnership concepts and terminology --- since obviated by changes in tax law --- and that the muddle most significantly (and surprisingly) affects LLCs organized under the Delaware LLC statute. The chapter demonstrates that such confusion is not inevitably and that, short of formal changes in statutory text, judicial decisions and an arguable consensus among expert lawyers may mitigate the confusion

Ratification: Useful But Uneven

Ratification permits a principal to determine to be bound by the legal consequences of action taken by an agent after the fact of the agent’s conduct when the principal would otherwise not be bound. By ratifying a principal may clarify the effects of uncertainty, furnishing reassurance to the agent, the third party with whom the agent dealt, and other parties interested in the status of the transaction. However, at the point the principal decides whether to ratify, the principal knows facts not known to agent and third party at the time of the agent’s unauthorised transaction, in particular subsequent developments in the market. The principal thus may be tempted to speculate at the expense of the third party, ratifying if the transaction seems then favorable to the principal and, if not, relying on the agent’s lack of authority. This article is a comparative analysis of ratification doctrine within the systems covered by The Unauthorized Agent. Ratification doctrine is variable among these systems and, even within single systems, difficult to rationalize. The article argues that these doctrinal characteristics reflect tensions between two competing principles that underlie ratification—the necessity for the principal’s consent and considerations of fairness to third parties—leading to variations in doctrinal specifics. Ratification’s unevenness also reflects the complexity of consent within agency doctrine; system-by-system variations also stem from differences in the significance of ratification and the contexts in which the doctrine matters

Accessory Disloyalty: Comparative Perspectives on Substantial Assistance to Fiduciary Breach

Culpable participation in a fiduciary\u27s breach of duty is independently wrongful. Much about this contingent form of liability is open to dispute. In the United States, well-established general doctrine defines the elements requisite to establishing accessory liability, which is categorized as a tort and often referred to as aiding-and abetting liability. What\u27s controversial is how the tort applies to particular categories of actors, most recently investment banks that advise boards of target companies in M&A transactions. In the United Kingdom, in contrast, accessory liability in connection with a breach of trust or fiduciary duty is controversial because the law is less clear, at least in part due to significant shifts in doctrine within a relatively short period of time. And equity houses the wrong, not tort (and the requisites for aiding-and-abetting liability in connection with a tort are significantly different). This essay, written as a contribution to a forthcoming book, uses contrasts between law in the US and the UK to deepen its examination of this distinctive form of wrongdoing. The essay\u27s central claim is that how the law categorizes a wrong matters for the elements of accessory liability. That is, breaching a fiduciary duty and culpably assisting in the fiduciary\u27s breach are both instances of wrongful conduct. Characterizing both as tortious, as does US law, has consequences for the elements of accessory liability. The comparative account also illustrates the independent character of accessory liability, underscored by outcomes in both jurisdictions in which the accessory\u27s culpability differs from that of the fiduciary as primary wrongdoer