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Vanderbilt Law Review

Jacob A. Sommer

First Page

561

Abstract

From beginning to end businesses are wed to the law. The life of a corporation typically begins with the filing of articles of incorporation with the secretary of state' and ends with either a merger into another corporation or dissolution. At every point in a corporation's life cycle, the American legal system places its imprimatur on the corporation's activities and governance. Inevitably, because of the sophisticated nature of business and frequent encounters with the law, businesses become engaged in their fair share of litigation and must resort to the judicial system for resolution.

Business, especially high-tech business, moves very quickly, and time is almost always of the essence. Investors consume data rapidly and evaluate and sell shares at the touch of a button. Thus, the market price of listed stock almost immediately reflects every corporate action. Corporations and employees must therefore act quickly to assure investors and avoid a decline in stock prices and profits. The unresolved issues created by existing lawsuits can jeopardize corporate profits and share prices; thus quick resolution of disputes becomes all the more important as business speed increases. A business's reliance on the law provides states with an avenue to make their forum more attractive as a state of location or incorporation. Corporate law is primarily state law, with a few notable exceptions. Further, state law controls many other legal aspects of the corporate existence, including contract law, certain aspects of employment law, trade secret law, covenants not to compete, and tort law. States therefore have a great deal of control over the legal system's approach to business and business-related litigation. Delaware's experience as a pioneer in using this control to shape corporate law and policy so as to encourage businesses to incorporate there has been quite successful. These efforts have been so successful, in fact, that more than sixty percent of Fortune 500 companies have incorporated in Delaware.

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