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Cleaning Up the Corporate Opportunity Doctrine Mess: A First Principles Approach


Yifat Naftali Ben Zion


December 29, 2023

Almost a century ago, a legal dispute over who is the rightful owner of Pepsi-Cola, at the time an unknown syrup company on the verge of bankruptcy, led the Supreme Court of Delaware to develop what is now famously known as the corporate opportunity doctrine. This doctrine is the central framework Delaware courts use to this day to determine whether an officer who seized a business opportunity has breached his fiduciary duties. Despite the doctrine’s old roots, it has thus far failed to reach stable ground. For one, while many corporate law scholars have supported the rule developed following this decision—which instructs the courts to consider not only the company’s interests, but also the officer’s “rights”—others have argued that the rule is too soft and even perversely so. For another, the application of this lenient rule has proven unstable. The corporate opportunity doctrine is vague and contested, as demonstrated by the contradicting rulings from other U.S. states. This Article suggests a way out of the mess. Using a comprehensive comparative analysis of the case law from the United States, the United Kingdom, and Canada, this Article demonstrates that the lenient interpretation of the corporate opportunity doctrine by Delaware courts is misguided and results from a misunderstanding of its normative foundations. The corporate opportunity doctrine derives from the general principles of fiduciary law, and thus a theoretical understanding of the concept of “fiduciary” is crucial for its proper application. As this Article shows, this decisive aspect of the doctrine has been largely neglected by the literature. By taking a “first principles” approach and going back to the roots of this concept, this Article demonstrates that neither side in this ongoing debate on the desirability of the doctrine is free from error. It concludes that the lenient position should be rejected and explains how to ameliorate current legal instability.


Yifat Naftali Ben Zion, Cleaning Up the Corporate Opportunity Doctrine Mess: A First Principles Approach, 80 Wash. & Lee L. Rev. 1609 (2023).