ABSTRACT
For a number of years, and particularly over the past 15 or so years, there has been some reasonably hot debate in corporate law circles as to the kind of laws that should be applied to companies. Essentially there are two kinds. The first kind, mandatory laws, sometimes referred to as ‘immutable rules’,1 are rules that cannot be varied by the parties; they are not subject to negotiation. The second kind are those which are usually known as ‘enabling rules’,2 or default laws,3 and are sometimes referred to as ‘gap-filling’, ‘facilitative’ ‘standby’, ‘fallback’ or ‘backstop.’4 This latter kind are rules that can be varied, permitting companies and others to modify or opt out of the application of those laws through contract.5 Judge Frank Easterbrook and Professor Daniel Fischel even go so far as to describe the American corporate codes as enabling statutes.6 It is notable that most discussions about opting out of rules in company law have been in relation to the shareholders of companies agreeing to the opting out of the application of fiduciary rules as far as directors are concerned. Of course, in this book we are concerned primarily with creditors.
