A Contractarian Approach to Stakeholder Primacy

Inspired by Alan Schwartz’s contractarian approach to business law, we provide a framework for determining when corporate stakeholders should be able to opt out of legal rules in order to advance social goals beyond wealth maximization. We argue that, under this Schwartzian framework, shareholders and other corporate decisionmakers would be able to credibly opt out of legal rules intended for their own benefit but would not be able to opt out of rules intended to benefit other constituents. We then apply this framework to four bodies of business law: corporate law, antitrust, securities law, and bankruptcy.