Rachel Leow’s book on corporate attribution in private law makes a very important contribution to company as well as private law in the UK but also more generally the common law world. The author has set herself a formidable task of understanding and explaining corporate attribution across four areas of private law: contract, tort, restitution/unjust enrichment and attribution of knowledge. This task requires her not only to master the attribution rules, but also to have a full and deep understanding of the principled underlying questions and academic debates in each of these four areas. This is no small challenge. Many academic scholars focus on one or perhaps even two of these areas, but few can claim to be familiar with, let alone having deeply researched, all four. Building on her understanding of these core areas, Leow turns her mind to corporate attribution and rises above the thicket of the cases and granular academic work to develop a conceptual framework through which the cases can be better explained, and which can also serve as a normative tool to guide how the law will develop in the future.
Leow is a doctrinal legal scholar. Company law has benefitted from contributions originating in economics and most recently in finance. The modern academic discourse has further shifted from economic analysis and modelling to a strong focus on empirically grounded work. All three strands of analysis have made and continue to make very important contributions to our understanding of company law, in particular in its wider societal context. It is nevertheless important not to lose sight of the fact that law is grounded in legal doctrine and this doctrine benefits from being developed and refined not only in practice, but also at an academic level.
The main thesis of the book stands on the observation that the attribution rules governing the four core areas of private law can be explained by appreciating that the company as a separate legal person is not a fiction, but the holder of powers, rights and duties. Without intending to make a contribution to company law theory, Leow nevertheless develops what she refers to as a “non-fictional account of attribution” (chs. 1 and 2). She points out that the law grants separate legal personality to the company and that this characterisation should be comprehensively accepted also in relation to formulating rules of attribution. She further observes that a characterisation of the company as a fiction undermines the ability of the law to recognise boundaries within which attribution rules can be formulated. She relies on Robert Stevens’ work to conclude that if we characterise the company as a fiction, we cannot develop a “right answer to when and why we attribute” (p. 30). Leow further points to recent philosophical contributions on group agency to note that groups can develop their own agency defined as the ability to form intentions and goals, and take action motivated by those intentions and goals (chs. 1 and 2). In this literature, companies are treated as prime examples of group agents. The group as an autonomous agent then takes its decisions not as aggregation of the views of its participants, but through a process that leads to an outcome that binds its members without necessarily reflecting their individual preferences.
This insight, very pleasingly, chimes with my own understanding of the company and of company law. I rely on empirical behavioural work, demonstrating how individuals take decision in groups, as well as on theoretical work, originating in the fields of institutional economics and sociology, to argue that companies are actors in their own right. This body of the literature recognises that rather than being a nexus of contracts, companies are places where procedures develop through law but also through the habits and practices of human beings working together that bring about autonomous corporate decisions and actions (E. Micheler, Company Law: A Real Entity Theory (Oxford 2021)).
Leow formulates a four-stage test on which questions of attribution turn. The four stages are:
(1) Did the company have the power to do the act?
(2) Was the power allocated or delegated to the individual acting?
(3) Was the power exercised within its scope?
(4) Was the power properly exercised?
For question 1, the author distinguishes legal powers from ordinary powers. Legal powers are the “ability” of a person “to change his legal relations with another by performing an act under his volitional control, where the change in the legal relations is brought about by the manifestation of intention to achieve that change” (p. 33). An ordinary power brings about “a change in the company’s legal relations” “without the power-holder manifesting intention to bring about that change” (p. 33). She identifies the corporate constitution as the source of both of these powers (p. 34). Question 2 concerns the allocation of powers to specific groups or individuals within the company in the constitution as well as the delegation of powers by the powerholders identified in the constitution (pp. 35, 40). Question 3 involves an interpretation of the scope of the powers either as allocated by the constitution or delegated on its basis. Question 4 adds the general principle of private law that powers must not be exercised in bad faith. The author then shows that these four high level questions can serve to explain the cases deciding attribution questions in contract, tort, unjust enrichment and attribution of knowledge.
As a company rather than a private lawyer, I would observe that the first question, while important in the case law predating the removal of the external effect of the ultra vires doctrine, no longer troubles attribution questions. As the author herself recognises (pp. 62, 85–86), the objects of the company no longer limit its capacity and the shareholders are no longer able through the constitution to limit the power of the directors to bind the company. The powers of the company are established by the Companies Act 2006 and are now unlimitable by the constitution. The question as to whether the company, other than a charitable company, has power to act by reference to its constitution would therefore always have to be answered in the affirmative. Any limitations contained in the constitution continue to bind the directors (Companies Act 2006, s. 171), but do not undermine the capacity and powers of the company as a separate legal entity or the ability of the directors to bind the company. Tort and criminal law have also abandoned the original position that companies did not possess the ability to commit.
The point made here, however, does not deflect from the fact that at stage one of any attribution test there has to be an enquiry into how the constitution allocates decision-making. I fully agree with the author that in attribution, we need to start with the constitution. Recognising that companies have unlimited powers we nevertheless need to examine the constitution to determine how decision-making is allocated.
Overall, the book is an example of solid doctrinal legal scholarship that not only covers four distinct areas of private law, but also builds a connection to fundamental questions discussed in the area of company law. Andrew Burrows rightly observes in his Foreword that the book reflects many years of tireless work. The book is based on a doctoral thesis, but its breadth and depth go well beyond what would be expected of any doctoral candidate, and evidences the understanding and intuition of an advanced academic scholar.
