David G. Yosifon (Santa Clara University – School of Law) has posted Escaping Bad Faith: Corporate Law, Sartre, and the Fiduciary Way on SSRN. Here is the abstract:
“Good faith” is the core command of modern corporate governance law. Corporate directors’ exposure to liability for breach of their fiduciary duties to the corporation and its shareholders has been narrowed by common law doctrines, statutory provisions, and charter innovations, to focus ever more particularly, if not exclusively, on behavior that is in “bad faith.” Even as the concept is enlisted to bear ever more weight in fiduciary analysis, the meaning of “bad faith” remains elusive in theory, doctrine, and practice. Here, I draw on the writings of Jean Paul Sartre to cultivate a deeper understanding of bad faith for use in corporate law jurisprudence. Drawing on Sartre’s insights, the article argues for recognizing passive but aware indifference as sufficient to meet the threshold of “conscious disregard” that is the touchstone of bad faith in prevailing corporate law dogma. This inquiry is undertaken both to advance a technical doctrinal understanding within corporate law, and to further a broader intellectual project concerned with excavating from corporate law discourse ideas that may prove useful to personal ethics and individual transformation. By bringing together corporate law and philosophical discourses on “bad faith,” both law and philosophy may be improved, and we may find some escape from bad faith, not only in corporate governance, but in personal conscience too.
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