The Principle of Subsidiarity and the Law of the Family Business

Abstract

There is a considerable incongruity between the ends and aims of the business association, on the one hand, and the ends and aims of the family -- and thus of most family businesses -- on the other. This Essay proposes a principle for the guidance of the law in such matters. This is the principle of subsidiarity, which instructs government and the law to recognize the smaller organizations of society and to foster their functioning along lines appropriate to their purposes and along the lines intended by their principals.

This Essay develops an especially rich account of the principle of subsidiarity, according to which that principle calls for a presumption, in matters concerning family businesses, that the principals intend the normativity of the family to dominate. Vigorous application of this enriched principle, it is here proposed, will lead to important doctrinal developments, and also to courts’ reorienting their general attitude towards the development of the theory and policy of business associations.