Preface

• Pages: 3-4
• Author: John C. Coffee Jr.,Frank Partnoy

iii

PREFACE

The principal objective of this book is to explain, in simple

terms but not simplistically, (a) the basic economic elements and

legal principles, as well as the language, of business organization

and finance; (b) the interrelationships between and among the

economic elements and legal principles; and (c) the practical impor-

tance of a basic understanding of those elements, principles, and

interrelationships. While we like to think that the book contains

some sophisticated ideas, we have tried to make it understandable

for a person with no background whatsoever in business, in ac-

counting, in economics, or in law. As our audience, we have tried to

keep in mind a bright young woman or man from a family of

musicians, with a college major in English, now entering a law

school or a graduate school of business—on the brink of discover-

ing, with great surprise, that the study of business can be interest-

ing and enjoyable, as well as profitable, and that it need not be

intimidating. Another important goal was to humanize big busi-

ness; to overcome a natural tendency to think of corporations,

especially those big enough to have become household names, as

bloodless entities; to show that the word ‘‘corporation’’ or a name

such as ‘‘General Motors’’ is nothing more than a shorthand device

for describing a complex set of relationships among people—people

with all the human characteristics of the readers and their friends;

and to demonstrate that an awareness of this reality is essential to

understanding and learning how to deal with this kind of complex

socioeconomic organization.

Because the book is intended for a bright but untutored audi-

ence, the order in which topics are considered reflects our intuitive

sense of the order in which questions might occur to, and need to

be answered for, such a reader. To that extent, we have abandoned

a potentially more sophisticated logic that would have focused on

such fundamental structural issues as control, risk and return,

duration (including termination and withdrawal), conflicts of inter-

est, and additional capital needs. We have also followed the tradi-

tional format of separating the law of proprietorship (agency),

partnership, and corporations, resisting the temptation to demon-

strate how each of these can best be seen as a set of legal rules

resolving in different ways the underlying structural issues. We

assume, however, that a thoughtful reader will ultimately be unable