Document Type
Article
Publication Title
South Carolina Law Review
Abstract
What should be done? The short answer is very little. The initial imperfection is brought into the system by creating limited liability, a rule that improves the prospects of recovery in some, but not all, cases. The cases that crop up in litigation are those in which the assets of the predecessor are not sufficient to meet the liabilities of its activities. In general, the status quo ante is the right rule, which the Third Restatement follows, with however, the important, if mistaken, exception that exposes the assets of the successor corporation in cases of mergers and acquisitions unless some care is taken to structure those transactions to avoid that risk. The overall lesson, one that Gary Schwartz well understood, is that grin and bear it is sometimes the best solution. Our institutions are always imperfect. We are tempted to assume that shiny new proposals that are not battle tested will do better than rules that have survived the scars of judicial combat. Sometimes that result is true, but in this case, the law of successor liability, subject to the caveat mentioned, looks efficient in that second-best sense of the best of a flawed set of alternatives.
First Page
1153
Volume
53
Publication Date
2002
Recommended Citation
Epstein, Richard A., "Imperfect Liability Regimes: Individual and Corporate Issues" (2002). Faculty Articles. 205.
https://gretchen.law.nyu.edu/fac-articles/205
