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Delaware courts have long respected the right to contract in Delaware, and possibly no entity is afforded more privileges to set the boundaries of its corporate form than the Delaware Limited Liability Company. Unlike nearly every other state, Delaware permits LLCs to abolish the duties of care and loyalty in their operating agreements, but forbids companies to eliminate liability for "any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing." The problem with the phrase "bad faith violation" is that, when referencing a breach of the implied covenant of good faith and fair dealing, it implies that there exists a non-bad faith violation of the covenant. In determining whether or not "neutral faith" or "non-bad faith" violations of the implied covenant are permissible under Delaware LLC law, this essay argues that Delaware courts should look to the relatively short history of the covenant, the contractarian spirit of Delaware laws and courts, and section 18-1101 of the Delaware Limited Liability Company Act to hold that the implied covenant can only be violated in bad faith. [ABSTRACT FROM AUTHOR]

The article discusses the author's views about legal scholar and Professor Lyman Johnson's contribution to Delaware corporate law jurisprudence as of 2017, and it mentions a business judgement rule, fiduciary duties of care and loyalty, and the legal obligations of corporate officers. The concept of doctrinal sensibility is addressed, along with business enterprise law and various corporation law litigation matters such as the Delaware Supreme Court case Cede & Co. v. Technicolor Inc.

When investment banks advise on merger and acquisition (M&A) transactions, are they fiduciaries of their clients, gatekeepers for investors, or simply arm's-length counterparties with no other-regarding duties? Scholars have generally treated M&A advisors as arm's-length counterparties, putting faith in the power of contract law and market constraints to discipline errant bank behavior. This Article counters that view, arguing that investment banks are rightly characterized as fiduciaries of their M&A clients and thus required to loyally serve client interests. This Article also develops an analytical framework for assessing the liability rules that will most effectively deter disloyalty on the part of investment banks toward their M&A clients. Applying optimal deterrence theory, the framework shows why holding only banks liable for disloyalty is unlikely to effectively deter such disloyalty. Instead, it suggests the need for fault-based liability rules to be applied to corporate directors (of M&A clients) for their oversight of the banks they engage as well as the potential need for public enforcement of certain hard-to-detect conflicts. Applying this framework, this Article assesses existing law, focusing on recent Delaware decisions, generally supporting that law but arguing that it is unlikely to effectively deter advisor disloyalty. It suggests changes to addess the regulatory gap. [ABSTRACT FROM AUTHOR]

Delaware corporate law embraces a "board-centric" model of governance contemplating that, as a general matter, all directors will participate in a collective and deliberative decision-making process. Rather than serving as a justification for a board majority to disempower directors elected or appointed by or at the direction of a particular class or series of stock or an insurgent group -- which we refer to as "blockholder" directors -- this system recognizes the need for a balancing of both majority and minority rights. In this article, we review the rights and duties of all directors and highlight cases where both board majorities and blockholder directors have overstepped their bounds. We caution that board majorities should deliberate carefully before taking action that limits a blockholder director's rights or excludes the blockholder director from participation in fundamental corporate matters. At the same time, we caution that blockholder directors should take care when exercising their rights, given that their affiliation with investors may make them vulnerable to duty of loyalty claims. We urge both sides to proceed with a sense of empathy toward the other and seek to make reasonable accommodations, and we emphasize the role that experienced corporate counsel can play in mediating disputes, resolving tensions, and striking the appropriate balance in the boardroom. [ABSTRACT FROM AUTHOR]

In the wake of the recent controversy in Delaware as to whether default fiduciary duties exist in alternative business entities, this Article examines why default fiduciary duties in alternative entities reflect sound legal policy at this point in time. This Article considers recent empirical data that raises serious questions as to the need for investor protections. This Article argues that the Revised Uniform Limited Liability Company Act (2006), particularly as modified by California, offers a compelling alternative to the Delaware paradigm because it offers the best of both worlds--default fiduciary duties as well as contractual freedom subject to reasonable managerial constraints. This Article recommends additional interdisciplinary research to develop legal policies that make sense in light of how investors actually behave. [ABSTRACT FROM AUTHOR]

The article discusses the waiver of fiduciary duties in limited liability companies (LLCs) in Delaware as of May 2013, focusing on a proposal for instituting a mandatory disclosure requirement in fiduciary-related situations. According to the article, fiduciary duties of care and loyalty are implicit to partnerships and agency-type relationships. The concept of self-dealing is addressed in relation to the behavior of business managers. The Delaware Limited Liability Company Act is examined.

The article discusses the expanding duty of loyalty owed to shareholders by corporate executives under Delaware law in 2012. It states that Delaware prohibits actions of bad faith by fiduciaries, along with knowing breaches of a duty of care and self-interested transactions. The legal doctrine known as the business judgment rule is also examined.

The article focuses on Delaware's business decisional law which provides standards of conduct for fiduciaries and its implications for corporate directors regarding negotiating merger transactions. It informs that directors must provide full and fair disclosure to a corporation and its stockholders as duties of care and loyalty whilst making corporate decisions. It also informs that these duties are applicable to all board decisions irrespective of merger transactions and corporate business.