The success or failure of an institution may hinge on some of the earliest decisions of its founders. In constitutional design literature, endurance is a widely accepted drafting objective. Indeed, constitutional endurance is positively associated with prosperous and stable societies. Like drafters of constitutions, business organizers have almost innumerable objectives for their enterprises, and attorneys drafting organizational documents must take into account these myriad goals. Oftentimes the drafting process fails to fully address some of the most important of these aims and results in suboptimal structures that lack predictability and reliability.
This article looks specifically at small business organizations and argues that drafters can draw from the lessons of constitutional design to facilitate a more deliberate drafting process that would result in more predictable business institutions. Such a process would accommodate a more thorough bargaining process among organizational founders and enhance the effectiveness of its governing documents. Certain design elements are correlated to constitutional endurance, and those same elements can guide the drafting process for business associations. Specifically, long-lived constitutions incorporate flexible amendment procedures, involve a greater number of constituents in the drafting process and enforcement processes, and offer more detail and specificity in the governing provisions. Business entities can utilize some of these same features, and this article offers specific suggestions for incorporating the elements associated with endurance into business drafting. By crafting organizational structures with elements that parallel those of long-lived constitutions, business attorneys can facilitate a more thorough bargaining process and craft more usable, resilient documents that effectively address unique client objectives.
Foster, William E.
"Enduring Design for Business Entities,"
Utah Law Review: Vol. 2015
, Article 1.
Available at: https://dc.law.utah.edu/ulr/vol2015/iss5/1