A Theory of the Business Trust


Eric C. Chaffee


Business trusts have played and continue to play an important role in the economy of the United States. They are commonly used for a variety of different business activities, including mutual funds, employee pensions, real estate investment trusts (“REITs”), and asset securitization. Despite the importance of these entities, very little legal scholarship exists focusing on this type of business form. Even the essential nature of these entities is not well understood. Although the metaphysical inquiry into the essential nature of the corporate form is well-developed, an essentialist theory of the business trust has never been advanced.

The purpose of this article and my related writing is to develop an essentialist theory of the business trust, based on an essentialist theory of the corporation that I have developed called “collaboration theory.” The collaboration theory of the business trust suggests this entity is a narrowly focused collaboration among the individuals involved in the trust for the economic development and gain of the beneficiary through the action of a trustee. This model has a number of normative implications, including that these entities must engage in unrelenting wealth maximization; that all other behavior should follow from this wealth maximizing mandate; and that these entities should be governed under a trustee primacy model. This article discusses these issues and more.


Business Trusts, Collaboration Theory, Corporate Form, Theory of the Corporation; Theory of the Business Trust

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88 University of Cincinnati Law Review 797 (2020)


COinS Eric C. Chaffee Faculty Bio