Reasonable Expectations v. Implied-in-Fact Contracts: Is the Shareholder Oppression Doctrine Needed?

Courts and commentators have compared oppression law’s reasonable expectations inquiry to an implied-in-fact contract analysis. This Article reveals that oppression law and contract law are actually more dissimilar in operation than they might appear. Although contract law has the tools to protect the close corporation shareholder, this Article illustrates how well-entrenched doctrinal hurdles will likely prevent it from doing so. The Article then argues that because oppressive majority conduct nevertheless breaches an actual bargain struck between the shareholders, and because the oppressive majority’s actions often result in a theft of the minority’s investment, contract law should take action to enforce the “deal” and to protect the minority shareholder. Thus, the Article concludes that when the oppression doctrine safeguards reasonable expectations, oppression law is effectively stepping in for contract law and is accomplishing what contract law itself should be doing. By coming to this conclusion, this Article answers a fundamental question—is the shareholder oppression doctrine needed in light of the established principles of contract law? By picking up where contract law leaves off, the shareholder oppression doctrine serves a critical protective function that justifies its independent existence.