Impersonal Personhood: Crafting a Coherent Theory of the Corporate Entity

Corporate legal personhood is a baffling and elusive concept. Are corporations persons and, if so, what does this mean?Ascribing the moniker of “person” to a corporation can conjure up the idea that a corporate entity is entitled to all the natural and legal rights that natural “personhood” entails. This, however, ignores that there are different kinds of “legal person” and that the scope of their respective rights differs based on the purpose of the personhood they are given. This Note posits that the law grants corporations entity-hood primarily to centralize contractual rights and obligations. This purpose, this Note contends, is the root of the “nexus of contracts” theory—a theory which suggests that corporations are not persons, but webs of contracts between their stakeholders. However, as David Gindis has noted, the nexus does not replace the corporate entity—it is the corporate entity. Further, nexus of contracts can and should be repurposed as a theory of corporate entity-hood, as it offers a theoretical framework for defining and limiting the scope of this ambiguous concept. Corporations should only be granted the rights necessary to fulfill this particular kind of personhood’s contractarian purpose—and this fits within the Bill of Rights’ individual-rights framework. Such an understanding meshes Gindis’s interpretation with David Ciepley’s proposal for a separate category of “corporate person” in a way that preserves Ronald Coase’s purposing of the firm in defining corporate rights. This Note looks at the right to freedom of speech as an example of the nexus for contracts theory’s application and concludes that this right is not strictly necessary to fulfill the contractarian purpose of corporate entity-hood. This new theory can and should be applied to other rights as well, by courts and policymakers alike.