TY - JOUR
AU - Licht, Amir, N.
AB - Abstract This article investigates the development of accountability and fiduciary loyalty as an institutional response to information asymmetries in agency relations, especially in firm-like settings. Lord Eldon articulated the crucial role of information asymmetries in opportunistic behaviour in the early 19th century, but its roots are much older. A 13th-century trend towards direct farming of English manors and the transformation of feudal accounting after the Domesday Book and early Exchequer period engendered profound developments. The manor emerged as (possibly the first) profit-maximising firm, complete with separation of ownership and control and a hierarchy of professional managers. This primordial firm relied on primordial fiduciary loyalty—an accountability regime backed by social norms that was tailored for addressing the acute information asymmetries in agency relations. Courts have gradually expanded this regime, which in due course enabled Equity to develop the modern duty of loyalty. These insights suggest implications for contemporary fiduciary loyalty. Introduction Judicial and scholarly discourse about fiduciaries’ duty of loyalty has emphasised the ‘no conflict’ and ‘no profit’ rules as a vehicle for coping with opportunistic behaviour much more than disclosure duties.1 This article seeks to rebalance this image of the structure of fiduciary loyalty by considering the roots of the fiduciary duty to account as an institutional response to acute information asymmetries. In this view, a duty of self-abnegation (‘no conflict’) and a duty of full disclosure stand on equal footing. Only together can they constitute the fiduciary’s duty of loyalty to fulfil her mission of promoting the beneficiary’s interest. Classic statements of the rationale that underlies fiduciary loyalty2 strongly allude to selfish motivations. Lord Chancellor King in Keech v Sandford said that ‘it is very obvious what would be the consequence of letting trustees have the lease’.3 In York Buildings Co v Mackenzie Lord Thurlow cited ‘the danger of temptation’.4 Lord Herschell in Bray v Ford famously noted that ‘human nature being what it is, there is danger … of the person holding a fiduciary position being swayed by interest rather than by duty’.5 Regardless of whether people are hopelessly selfish, however, this factor alone cannot explain the legal imperatives of fiduciary loyalty. Information asymmetries prevent beneficiaries from fending off fiduciary opportunism (also known as the ‘agency problem’) because the fiduciary will always enjoy informational superiority vis-à-vis her beneficiary and vis-à-vis any court trying to adjudicate a dispute between them. Information asymmetries are ubiquitous. They exist, and can therefore facilitate opportunistic behaviour, in virtually every relationship, from simple sales contracts to the most complex relations. They become acute, however, in fiduciary relations, where the parties’ power and vulnerability are extreme. This fundamental insight, that particularly acute information asymmetries underlie the law of fiduciary loyalty, was articulated in special detail in a line of decisions by Lord Eldon in the early 19th century. In Ex parte Lacey, which involved a purchase of trust property by the trustee, Lord Chancellor Eldon explained Equity’s strict attitude against such transactions: [The trustee] must according to the rules of this Court be watched with infinite and the most guarded jealousy; and for this reason; that the Law supposes him to have acquired all the knowledge a trustee may acquire; which may be very useful to him; but the communication of which to the Cestuy que trust the Court can never be sure he has made.6 In Lacey, and shortly thereafter in Ex parte James7 and in Ex parte Bennett,8 Lord Eldon captured the crucial role of information asymmetries in facilitating opportunistic behaviour, which is distinct from individual motivations (‘human nature’).9 Moreover, he has identified the special danger to fiduciary relations from information that modern economic theory dubs ‘non-observable’ and ‘non-verifiable’. The former relates to information about performance, breach or surrounding circumstances (‘state of nature’) that is unavailable to the principal if the agent has unique skills, for which reason she may have been hired in the first place. The latter denotes information about a breach, for instance, that is beyond the grasp of a judge, rendering the principal helpless against it. Thus, the question, what knowledge [the trustee] has obtained, and whether he has fairly given the benefit of that knowledge, to the cestui que trust, which he always acquires at the expence of the cestui que trust, no Court can discuss with competent sufficiency or safety to the parties.10 Economic theory holds that any attempt at cooperation between people is bedevilled by the risk of opportunism11—defined by Williamson as ‘self-interest seeking with guile’12—due to a combination of the parties’ self-oriented motivations and asymmetric information. The theory of the firm and agency theory in particular address the firm’s boundaries and its internal organisation in light of these factors, and thus go beyond treating the firm as a ‘black box’.13 Self-interestedness and information asymmetries render the agency problem one without a solution. The avenues that the theoretical literature suggests for mitigating this problem primarily include ownership—ie having the principal do the job himself rather than delegating it—and using fixed-claim contracts that leave the agent no discretion—for example, using debt contracts instead of equity investment.14 Such options are irrelevant for fiduciary relations, which are established for delegating discretionary power to the fiduciary. Societies may implement informal (non-legal) institutions that could moderate selfish behaviour through culture and social norms.15 Information asymmetries, however, resemble a force of nature in that no mechanism can help one know something beyond the information one can obtain. Information asymmetries thus exert a more pernicious effect in terms of facilitating opportunistic behaviour than selfish motivations do. The duty of loyalty constitutes society’s formal (legal) attempt to mitigate the risk of fiduciary power abuse. However, without full disclosure of all material information, the proscriptions of the ‘no conflict’ and ‘no profit’ rules lose their efficacy, and fiduciary loyalty as a whole is rendered hollow. This article traces the origins of full disclosure as a main pillar in fiduciary loyalty in the latter’s incarnation as the duty to account through a detailed review that combines economic theory, accounting history and legal history. This regime is an outcome of an evolutionary process that began with the Norman Conquest and was perfected during the ‘long thirteenth century’ (c1180–c1320). These developments enabled the formation of accountability as a social institution and a general doctrine of fiduciary loyalty, as they provided courts with an effective framework for coping with information-asymmetry-driven opportunism. Legal historians who studied the action of account have not dealt with the accounting aspect, while accounting historians ignore the legal implications of those early developments. Weaving together these strands of scholarship sheds light on the structure of contemporary fiduciary loyalty. It should be emphasised at the outset that this article is neither an exercise in originalism nor a call for adopting an originalist approach to fiduciary law; nor does it purport to cover every stage and aspect in the development of legal accounting. Its primary goal is to enrich the analysis of fiduciary loyalty with insights from other disciplines that may help expose its internal logic. From Feudal Accounting to Fiduciary Accountability Domesday and the Exchequer Commissioned by King William the Conqueror in 1085, the Domesday inquest was the most extensive national survey until 19th-century censuses.16 Surveys had been held prior to William’s reign by Egyptian pharaohs, Roman emperors and Anglo-Saxon kings,17 and in Carolingian Europe during the ninth century Charlemagne sent survey commissioners to re-establish his authority over his vassals.18 The latter case in particular may have inspired King William to conduct his inquest. The Domesday inquest covered all the men and inventory in every manor. The data were compiled into structured records, which specified the value of each manor in terms of the income it could yield in light of the productive resources it possessed.19 Domesday’s approach to manorial value represented a paradigm shift in conceptualising the manor as a firm. Manors had been considered ‘firms’ in the Anglo-Saxon period, at least etymologically, but in the theory-of-the-firm usage they were ‘black box’ firms. During the reign of King Edward the Confessor, royal manors in nearly every shire had the duty of the ‘farm of one night’ (Latin firma unius noctis), which required the manor to supply the royal court with sufficient cash or kind, or both, to support the court for a full day.20 The collection of these dues by the sheriff was known as ‘farming the shire’.21 The scope and composition of this farm was not necessarily related to manorial productive capacity.22 The land-based taxation of manors viewed the manor as similar to a black box by disregarding its internal organisation. Domesday partially opened this black box by systematically considering the manor’s composition in order to assess the cashflow it could generate, and appears to have been a relatively efficient system.23 Domesday thus exhibited a conception of the manor consistent with Coase’s24 insights about the firm as a coordinated assembly of assets, detached from the market while in need of management. This conceptualisation of the manor as a firm on the operational side consequently invoked the challenges that firms pose—namely, the principal-agent problem and the information asymmetries that it thrives on. The development of the Exchequer, discussed next, was a crucial step in that direction. In 1110, King Henry I was intent on raising a dowry for marrying his daughter Matilda, aged eight, to King Henry V of Germany, the Holy Roman Emperor-designate. Henry I entrusted the task of collecting the dowry to Roger of Salisbury, his Chancellor, later Bishop of Salisbury and then Justiciar (first minister). To accomplish this task, Roger fashioned the Exchequer, which by the end of that year was already in place, and presided over its business.25 The Exchequer was the result of an evolutionary process rather than a revolutionary one. Although it was Roger’s brainchild, he did not start from scratch.26 Similar to the Domesday inquest, it was inspired by similar earlier practices. Roger’s ingenuity was as a systems integrator. He assembled several components—some new, some familiar—to create a complex, interlocking financial administrative system that later evolved into an effective mechanism of accountability. The Exchequer’s innovative design integrated a set of elements for collecting, processing, recording and verifying information. For example, the Exchequer reintroduced the abacus in England; it used pipe rolls for a durable record and tallies as short-term memory sticks, and so forth.27 Its most famous feature, as described by fitz Nigel’s Dialogue of the Exchequer (c1179),28 was a large table with a chequered tablecloth that functioned as a spreadsheet for executing calculations and displaying balances.29 The Exchequer had a transformative effect on English society, stimulating lay literacy and a shift from oral to written records. The demands of the royal Exchequer and courts of law compelled knights in the shires and burgesses in the towns to create lesser bureaucracies of their own with compatible practices.30 Charge and Discharge Charge and discharge accounting is a generic term for single-entry accounting systems that cover the flow of resources over a period of time. This method does not distinguish between capital and revenue transactions.31 Often referred to as ‘stewardship accounting’, its primary objective is to assure the principal of the integrity of the agent and to enable the agent to prove his honesty. The Upper Exchequer, with the table at its centre, was the physical arena in which accountability was enacted according to the logic of charge and discharge accounting. If the table, abacus, pipe rolls and tallies were the hardware of the system, then charge and discharge accounting was its software. Like other features of the Exchequer, charge and discharge accounting was not entirely novel. Rudimentary versions of this method had been used since antiquity—from Babylonia to Pharaonic Egypt to the classical Roman period—for purposes of recording wealth and monitoring agents, including estate managers (villicus).32 The English method was either reinvented or inspired by the Roman one, which was primitive in several respects.33 In any event, charge and discharge as exercised by the Exchequer was the first fully functioning accounting method in the West, preceding by some 300 years the double-entry accounting method, which has since come to dominate business and public administration.34 British administration continued to rely on charge and discharge accounting until the 19th century, and it was still practiced in several contexts in the late 20th century.35 The Exchequer summoned the sheriff (‘shire-reeve’) biyearly to account for the king’s revenues during the passing year. The different revenues expected from the sheriff and from several other accountants formed two categories: fixed and certain versus casual and uncertain.36 Fixed and certain revenues included rents from royal demesne manors and from earls and other tenants-in-chief who held manors in the shire, payments (‘farms’) imposed on persons, cities or towns, and additional irregular payments that were charged in gross sums.37 Uncertain revenues included county incomes from court fees and fines imposed in criminal courts.38 However, these sums could be determined ex post and were readily observable and verifiable. The total of these revenues, together with the carry-over balance of last year’s account, was the sheriff’s ‘charge’. This sum was represented by piles of coins, serving as counters. The sheriff would then gradually clear this balance by producing tallies, vouchers or other references for prior payments, authorised expenses (eg for hosting the king or his guests upon a formal writ) and allowable deductions (eg religious contributions). The Calculator would work each such ‘discharge’ by removing coins from the table. The process was exceedingly strict as the sheriff had to show formal justification for every discharge, without which he was personally responsible for the balance, including items that were disallowed (‘falsified’) or added (‘surcharged’).39 At the end of the process, ‘his whole charge and discharge was read and cast up in open Court’, before the entire audience of the king’s earls sitting as Barons of the Exchequer, the Treasurer, Auditors and other officers.40 Finally, the sheriff had to pay the balance, minus authorised carry-overs and delays (‘respites’41), or else he was liable to be put in irons.42 Scholars agree that the accounting process was quite an ordeal for the sheriff. The strongman of the shire in regular days was described as ‘trembling in his boots when the time came for his reckoning at the chequered table’.43 Let us pause for an interim assessment of the Exchequer as an accountability institution. The sheriff’s role as a collection agent was only one among his military, administrative and judicial responsibilities.44 The monitoring challenge that the Exchequer system faced was thus limited to ensuring that all the monies due to the king found their way to his coffers either as silver coins in the Lower Exchequer or notionally as authorised expenses. Roger of Salisbury’s primary and long-lasting achievement was in developing a highly effective mechanism for documenting and verifying the sheriff’s accountability to the king. A key feature of the Exchequer was its openness. Its ritualistic procedure ensured transparency while validating royal authority.45 In terms of information asymmetries, the Exchequer dealt mostly with information that was costly, due, for example, to the expense of keeping records in a 12th-century medieval environment. Charge and discharge accounting has a grim logic that what is not properly discharged remains charged. This burden shifting incentivised the sheriff to provide as much information as possible to justify his performance. While rents and farms had been determined in correspondence with perceived productive capacity, they were preset in fixed sums based on Domesday rents or as subsequently determined by the Barons of Exchequer.46 With regard to unobservable or unverifiable information, the system adopted a diametrically opposite approach: a purposeful effort was made to reduce irregular revenues to certain sums even at the cost of loss of accuracy and of revenue. The Royal Exchequer thus became ignorant of the actual income generated by the manors. The upshot was that the Royal Exchequer could at most be defined as an audit system. It was not a full-disclosure, genuine-accountability system. The king, as principal, waived nearly every claim with regard to the residual interest in his properties. Such a radical approach is nonetheless consistent with the economic analysis of principal–agent relations under information asymmetries. An optimal strategy for the principal-owner in such circumstances is to forego his equity interest in favour of debt.47 Presetting rents and farms (especially close to capacity), charging fines in gross sums and similar practices converted claims that are hard to observe or verify into fixed claims that could be dealt with more easily by the accounting process, subject only to cost considerations. Bearing in mind the administrative technologies of the era, this design choice seems not only reasonable but admirable. In tandem, the Exchequer system enabled the sheriff to take advantage of his informational superiority by appropriating undisclosed revenues. Whatever he could put his hands on without having to account for was his, which may explain why some people paid for nomination to the office.48 Inevitably, this situation also created a problem of unscrupulous and even abusive sheriffs.49 Manorial Accounting An inflationary shock around 1200 was accompanied by a prolonged trend of population expansion and economic growth, leading to increasing grain prices.50 These circumstances caused landholders to abandon the mode of renting or ‘farming’ (ie letting for a fixed ‘farm’) their estates and instead adopt a mode of actively managing their properties—known as ‘demesne farming’, ‘high farming’ or ‘direct farming’. Direct farming involved selling to the market with a view to maximising revenue. The motivations for this change probably included a desire to adjust rent levels to changing prices and new opportunities for exploiting the decreasing value of labour relative to land.51 This trend was confined to England, however, with no parallel on the Continent in spite of similar circumstances there.52 The manor was the focal unit of the transformation to direct farming. A typical manor comprised arable land cultivated primarily for grains, a common pasture, some woodland or fishery, a small village for peasants and artisans, and a manor house for the lord.53 In many cases, however, the lord did not reside in the manor (he often had more than one). A hierarchy of agents thus developed to run the manor.54 At the top there was the steward, who swore to serve his master’s interests to the utmost of his ability. The steward was responsible for the entire estate. In practice, however, he was an outsider who visited the manor just a few times a year. Often coming from the clergy (also in lay estates), and sometimes having a legal education, his main responsibilities included laying down general policy for the manor, deciding on major developments, selecting the bailiff and holding manorial courts.55 The ‘dirty boots’ officials who actually ran the manor’s daily life were the bailiff and the reeve, though one person could hold both offices.56 The bailiff was a freeman, a salaried professional nominated by the lord and living in the manor house, who might take responsibility for a number of manors under an oath of fealty before the steward (on which more below).57 The reeve was a landholding peasant whom the unfree tenants of the manor elected annually from among themselves, in consideration for which he received substantial benefits. As ‘a man of the manor, [he knew] every field in it, and [was] acquainted from boyhood with the eccentricities and habits of every person inhabiting its cots’.58 During the era of direct farming, these functionaries formed a class of professionals whose expertise was rooted in long experience. The move to direct farming brought the manor closer to a modern firm. Chandler has argued that before the rise of the modern firm—the large-scale enterprise with absentee owners and salaried professional managers—firms were small and personally owned and managed, usually by family members: ‘as late as 1840 there were no middle managers in the United States … At that time nearly all top managers were owners; they were either partners or major stockholders in the enterprise they managed.’59 Johnson and Kaplan agree: ‘Before the early nineteenth century, … [t]here were no “levels of management” or long-term salaried employees.’60 Although the English manor was nothing like the giant American corporation, with its dispersed shareholders and hierarchical armies of managers, it nevertheless displayed governance features that firms call for. Precedents for estate managers existed in both ancient Egypt and in the Roman Empire.61 In the latter case, those delegates tended to be the owner’s sons or his slaves through the institution of peculium—a fund of assets managed by the slave for his master.62 English direct farming was different. The bailiff was a free agent, and even the reeve could redeem himself from office. In deciding to shift to direct farming, English landlords exercised their control powers only notionally while remaining absentee owners, instead delegating those powers to a hierarchy (skeletal as it may have been) of salaried professional managers who were not bound by the family ties or slavery status that could motivate compliance. Landlords thus turned manors into rudimentary yet genuine firms in the modern sense of the term. Running the manorial firm with a managerial team necessarily engendered agency problems. The reeve and bailiff enjoyed information superiority just as the Roman slave did with regard to his peculium.63 Unlike Roman masters, however, English landlords could not mete out harsh corporal punishments, nor could they offer extreme rewards comparable to manumission. The latter reward was crucial for coping with unobservable and unverifiable information that characterised managing a peculium.64 In the absence of such intense incentives for compliance with the lord’s expectations and of internal constraints on opportunistic behaviour due to father–son relations, the reeve/bailiff’s information superiority exacerbated the agency problem, rendering their lords essentially powerless.65 Contemporary sources warn against unscrupulous agents who exploit this superiority. Walter of Henley’s Husbandry, a representative of a genre of self-help guidebooks for lords and stewards,66 thus admonishes: Yea, many theare bee which … knowing that the thing is an other mans and not theire owne they take it with the right hand and the lefte as they may best extort it and theire unfaithfulness not be perceived. Looke upon your things often and cause theim to be looked upon and then suche as serve you will so muche the rather eschewe to doe evell and wille endevoure to doe the better.67 Walter’s concerns were not unfounded. Robert Carpenter’s treatise contained detailed examples for ways in which the reeve/bailiff could derive and hide private benefits.68 The Seneschaucy (steward), of the same genre, thus instructs: Whenever the [steward, bailiff and reeve] have made a profit or caused loss during the year this will be seen through the audit in a day or two; and it will be easy to recognize good sense and improvements or folly … The auditors may thereby make their inquiries into doubtful transactions.69 Such advice to closely monitor the agents required a monitoring system. Jones advances a compelling account of the channels through which Exchequer accounting diffused throughout the country during the 13th century. Briefly, key charismatic individuals who participated in the Exchequer process as barons or as sheriffs came to appreciate it, so that when the need to monitor agents arose for them, they implemented the system they were familiar with. Jones points in particular to Walter of Merton, Bishop of Rochester and chancellor under Henry III and Edward. After Walter moved Merton College to Oxford in 1274, its warden was subject to an audit before a panel of scholars in an exchequer chamber with a chequerboard table.70 This diffusion likely was part of the broader bureaucratisation trend of manors and boroughs inspired by the Royal Exchequer. Dobie adds that ‘the clergy who were involved in royal administration both influenced and were influenced by royal financial procedures’.71 The Exchequer framework thus was adopted with all of its characteristic features by monasteries, lay estates and manors, towns and boroughs. ‘Exchequers’ became commonplace. Searching inquiries before an audience in the Exchequerian tradition that terrified the accountants were held regularly by itinerant auditors in manor houses and in monasteries, by sheriffs in their town castles, and even in public houses (including a discharge for ale and wine at the audit).72 Accountability in this format became a widespread practice that was repeatedly enacted and observed by all societal members in numerous contexts. It was thus institutionalised as a social norm—a mode of behaviour widely perceived as accepted and expected. Typically for social institutions, causal effects between direct farming and manorial accounting were likely mutual. Harvey thus related the development of manorial accounting to direct farming due to the need to monitor the bailiff.73 In tandem, in light of the fact that direct farming was not practised in Europe, Oschinsky argued about this ‘English exceptionalism’ that the Exchequerian-manorial accountability system was causative: ‘because [German lords] had neither the reliable staff of trained officers nor records comparable to the accounts’.74 To support direct farming, however, manorial accounting had to be adjusted to a more challenging monitoring task. Manorial accounting used a simplified version of the Royal Exchequer in terms of hardware,75 but its ‘software’—charge and discharge accounting—needed modification. Periodical surveys provided the baseline in resemblance to the Exchequer’s reliance on the Domesday inquest.76 The charge section in Exchequer accounts comprised three main items: carry-over arrears, preset rents, and court fees and fines. Standardised account templates for manorial accounts imported these items. However, this framework did not accommodate receipts from sales of produce or livestock. Another item had to be added to the charge section for receipts from such sales, together with a parallel item in the discharge section for necessary expenses (eg repairs, purchase of seeds, expenses of harvest). The balance hopefully reflected a surplus (proficum), which was due from the bailiff.77 The additional items that covered direct farming activity differed radically in their informational properties from the charge and discharge items used by Royal Exchequer accounting. The latter were all observable and verifiable; direct farming items were not. Accounting for direct farming required first the monitoring of every single activity on the manor, per crop, per kind of livestock, etc, down to eggs and sides of bacon, and then an assessment of the surplus.78 The respective charge and discharge items called for full disclosure of unobservable and unverifiable information. Only the reeve/bailiff could know if crops were meagre because of vermin, bad weather, villeins’ poor efforts or embezzlement. Carpenter’s treatise vividly demonstrates the problem: Whoever shall have 150 breeding ewes, some of them will be barren, some will die before giving birth, some will abort, and some of the lambs will come from maiden ewes. (Note that sometimes a ewe has two lambs in one year.) When it is said that six were barren, it will be reported that nine were barren; and [when] four died before giving birth, it will be reported that five aborted; and when it is said that ten were born of maiden ewes, it will be reported that five were born of maiden ewes. And thus you will make a profit of twelve lambs or twelve skins.79 The very notion of ‘charge’ was thus stretched beyond its simple meaning. Amounts due could not be charged unless first disclosed by the reeve/bailiff. In a striking manifestation of information asymmetry, the space for that sum would be left blank, awaiting the accountant to provide the necessary information.80 The manor as a firm under direct farming thus exposed the lord to (absentee) ownership risks and uncertainties. Put differently, while Exchequer accounting handled claims that resembled debt more than equity, manorial accounting had to do the opposite. Aware of human nature being what it is, landlords did not naively rely on reeves and bailiffs’ benevolent candour. Their accounts were assessed against demanding (and controversial) targets, eg as multiples of seed quantity. Setting a target imitated the fixed ‘farm’ charge, incidentally disguising the actual information asymmetry. The itinerant auditors who examined the accounts were strict professionals with deep knowledge of the business so as to counterbalance the reeve/bailiff’s informational advantage.81 Absent a convincing, well-supported account for his failure to meet a target, he was made to meet it by disallowing the discharge.82 In addition, stewards held presentment sessions in manorial courts, in which juries of elite villagers provided hard-to-observe information about the reeve/bailiff’s management on issues that today we would classify as involving loyalty, care and business judgment.83 Landlords in later periods, and possibly earlier, employed spies to obtain information on estate management beyond the information provided in the financial accounts.84 Finally, an ‘excess’ (excessus) accounting item may have served to give the reeve/bailiff a stake in the surplus with a view to aligning his interests with the lord’s, not unlike modern equity-based remuneration.85 These measures together reflect keen awareness of information asymmetries in agency/fiduciary settings and the elaborate mechanisms needed to ensure accountability. One particular episode underscores the differences between Royal Exchequer accounting and the fuller accountability regime that had evolved from it for direct farming. A marital aid again provided a stimulus. In 1235, King Henry III levied an ‘aid’ tax to raise money for the marriage of his sister to Holy Roman Emperor Frederick II.86 A year later, the king’s council began an experiment of direct farming in royal demesne manors with a view to increasing revenues. A limited set of manors were handed to three ‘custodian’ or ‘bailiff’ sheriffs, who were charged specifically with maximising the long-term value of those manors. They were to pay the king all the manorial profits and receive in return a fixed annual salary, similar to bailiffs of lay manors.87 The regular sheriffs, who used to function as heavy-handed creditors, lacked the expertise and entrepreneurial personality necessary for running a for-profit manorial firm. ‘The sheriff’s office was not equipped for estate management. It knew how to manage money not men.’88 The experiment improved productivity, but monitoring complex manors from afar proved impractical relative to collecting rents.89 Beyond the political ramifications of depriving sheriffs of the income they could derive from their positions, direct farming of royal manors required the Barons of the Exchequer to engage in full-fledged manorial accounting, which they could not handle. The experiment was thus terminated in 1240.90 Earlier attempts at direct farming of royal demesnes for revenue maximisation failed for similar reasons. For example, in 1204, King John began an experiment in which certain sheriffs had to account at the Exchequer as custodians rather than as farmers for variable income beyond the standardised shire farms.91 That system, too, was abandoned, primarily due to administrative difficulties, in addition to the approaching crisis of 1215 that culminated in the Magna Carta.92 These experiments demonstrated that holding an agent-run, open-ended, profit-oriented enterprise depends on utilising a full-disclosure-based accountability system. Without the perfection of such a system for direct farming of lay and ecclesiastical manors, the royal manor experiment could not have been carried out. Moreover, finding this type of accountability regime impractical necessarily entailed giving up on direct farming and resorting to fixed increments, in line with modern economic analysis. Out of necessity and drawing on prior experience, manorial accounting perfected a regime of accountability that can fairly be described as primordial fiduciary loyalty, as it comprised precursors of both ‘no conflict’ and ‘full disclosure’ components. This regime governed individuals who, due to a combination of undertaking and status, committed to exercising discretionary power over other people’s assets on their behalf and in their best interest. The full disclosure element in this regime was not merely ancillary or supportive; it was constitutive. By way of a brief digression, following are a few words regarding the ‘no conflict’ component of fiduciary loyalty. Upon assuming office, the steward and the bailiff took an oath of fealty to the lord, without doing homage. An oath of fealty (Old French feauté: fidelity, loyalty; related to Latin fides: faith) entailed an obligation to faithfully uphold the lord’s interests.93 The oath of fealty was essentially a promise of loyalty reinforced by an appeal to God whilst in physical contact with a sacred object like a relic or a book of Gospel. In the bilateral feudal relationship the undertaking of loyalty (Latin fidelitas) was accompanied by an entitlement to benefice (Latin beneficium), rendering the lord a beneficiary. Having been imported into England from France, and deriving from Carolingian sources, the substance of fealty according to Ganshof may look familiar to fiduciary lawyers: ‘The Carolingian notion of loyalty was thus essentially negative in character, consisting of nothing more than the duty of undertaking nothing against the interests of the person to whom one owes fealty.’94 Fealty nonetheless had several facets, including certain affirmative (prescriptive) obligations.95 More research is warranted to examine possible roots of the ‘no conflict’ rule in medieval fealty.96 Perhaps they go back earlier.97 The above does, however, seem suggestive. Returning to full disclosure, the duty to account for direct farming denied the reeve/bailiff any benefit that might stem from his service without a fully informed authorisation or justification to support a discharge. This requirement ‘to account to his lord for every penny received, every peck of corn harvested, every egg laid’98 thus foreshadowed the ‘no profit’ rule of fiduciary loyalty. ‘No steward, bailiff, or servant,’ insisted the Seneschaucy, ‘no reeve, beadle, or hayward ought to take at a token price or even at full price, anything which is in their care, because it is not right that they should buy cheaply or at full price what they should improve and then sell at profit for their lord.’99 This regime relied on a transparent system of full disclosure and audit, which in turn cultivated societal support, and demand, for accountability. The Seneschaucy, being a non-legal source, thus reflected (perhaps an idealised) social norm. Finally, the grim logic of charge and discharge accounting caused the reeve/bailiff to meet the lord’s expectations one way or another, as if he performed his task as he had sworn to do, much like a modern fiduciary.100 The Black Death reached England in 1348 and wrought havoc in English society and economy. By the end of the century, nearly all landlords had abandoned direct farming and tried to revert to rentier farming; manorial accounting also declined.101 Recent historical research has been adding institutional factors to extant Malthusian and Marxian theories about those events.102 The landed elite tried to reverse the tide. The Ordinance of Labourers 1349 and the Statute of Labourers 1351 thus were intended to return pay to its pre-plague level. New forms of action, including assumpsit and trespass on the case, were harnessed to regain control over the lower classes.103 Against this backdrop, the decline of manorial accounting stemmed not from any functional deficiency, but simply from a severe shortage of competent professionals who were crucial for operating the accountability apparatus, once again showing the essentiality of accountability to agency/fiduciary relations.104 The knowledge and social endorsement of accountability as a governance institution that had developed during the preceding ‘long century’ did not vanish, however. The next section discusses how the legal system took the baton and preserved and developed accountability into its current state. Accountability and Disclosure in Fiduciary Loyalty Account When it appeared in the common law around the end of the 12th century, the action of account was a measure for manorial lords against bailiffs who refused to render accounts.105 Plucknett and Brand noted that actions of account were brought both in county courts and in the king’s courts, although little is known about such actions in the former courts.106 Stoljar argued that ‘[a]ccount … did not begin as the expression of a general principle, such as a principle of accountability, of application to all manner of agents and fiduciaries’.107 Getzler takes a broader perspective, claiming that, together with sister writs like novel disseisin and nuisance, account marked the origin of the English common law as a new system of jurisprudence, each dealing with a separate mischief—account being responsible for making the agent act as if all duties had been duly performed.108 Pointing out the informational conundrum, Belsheim noted that account addressed issues that the forms of action of debt and detinue could not.109 Debt had to be liquidated, while the lord had (and could have) no idea what was due to him. Likewise for detinue: either there was no chattel that had been taken and had to be restored or the lord did not know about this without an account. Several other legal scholars have dealt with the action of account, some quite some time ago.110 The legal literature has directed its attention to legal developments subsequent to the action’s appearance. In doing so it has failed to link it to the non-legal aspects of manorial accounting that this article deals with. This section provides a non-exhaustive overview of the development of account, progressing in leaps and bounds through its 800 years of existence while emphasising the earlier stages.111 The structure of the action of account provided an optimal response to the landlords’ need for accountability. In the first stage, the court would endorse the lord’s right by declaring the defendant his bailiff. The second stage—the actual accounting—was then essentially outsourced to professional auditors (later, to Chancery masters). In applying charge and discharge accounting, this process reversed the normal mode of litigation. The bailiff, like all future accountants, bore the burden of showing that he had discharged his duties properly. Requiring him to make full disclosure neutralised as much as was practical his informational advantage over the lord-plaintiff. In the third stage, the resulting balance, now liquidated, would be returned to the court and given the force of judgment as debt, thus mobilising the state’s enforcement powers. The Provisions of Westminster, 1259 authorised auditors to instruct the sheriff to imprison non-accounting bailiffs.112 The action of account proved successful and was subsequently applied to a growing circle of defendants who today we would readily classify as fiduciaries. Plucknett described this expansion as a process in which ‘[a]s the middle ages proceed more and more people are admitted into the category of bailiffs’, consequently making them liable to account, where the word ‘bailiff’ carries the ‘fundamental idea of one person being placed in control of another’s property’.113 Referring to ‘a deliberate and sustained attempt to extend the availability of the action’ on behalf of the courts and the king’s Chancery, Brand points to the geographical diffusion of the action of account throughout England, in addition to the types of relationships and transactions for which it became available.114 The Provisions of Westminster, 1259 and later the Statue of Marlborough, 1267 added guardian in socage to the bailiff as owing a duty to account. As persons responsible for land in feudal tenure during the infancy of the heir, guardians in socage had power over another’s assets resembling that of bailiffs.115 The Statute of Westminster, 1285 added a category of accountants comprising ‘all manner of receivers’, which was a major cause for the loss of distinctness of account.116 The ‘receiver’ may have been an extension beyond manorial bailiffs to persons who were given goods or money to transact in them for the plaintiff.117 The need to specify the nature of the defendant in the old forms of action engendered indiscriminate references to ‘bailiff or receiver’, thus starting a gradual dilution of the label ‘bailiff’. This category later expanded to include partners, who received assets with a view to transacting in them at the receivers’ discretion though not as agents.118 From the late 1270s, designations as ‘bailiff’ or ‘receiver’ in actions of account became common between merchants, in county courts and later in Chancery courts.119 Towards the end of the 13th century, the label ‘bailiff’ was attached to custodians in custodia, a precursor of the trust, so as to make them accountable.120 By that time, actions of account also named as ‘bailiff’ people who as stewards were responsible for managing their lord’s legal affairs and people who specialised in providing litigation-related services, not unlike modern attorneys.121 The scope of ‘bailiff’ later expanded yet further to include people who, on their own initiative, undertook to deal in assets for the benefit of others (like a fiduciary de son tort122), while at the same time efforts were made to exclude people who dealt in assets on their own account.123 The liability to account had to rest on one of the accepted categories, which were all based on some form of undertaking, while within such categories a defendant could not avoid rendering accounts even if no debt was outstanding,124 akin to status-based liability. Some actions of account concerned considerable sums and their number grew, until by the mid-14th century there were many more actions of account than of debt and covenant.125 These developments took place during a period of gradual shift from a feudal agrarian economy to greater reliance on markets and business and decline of serfdom.126 The various relations mentioned above are particularly vulnerable to agents’ opportunism, so the social institution that had emerged may have facilitated this economic activity. Thus, manorial accounting, the legal action of account and the social norm of accountability were intertwined in the social transformation of the era as they facilitated absentee ownership of quasi-firms and, once established, could be extended to other fiduciary-type relations.127 The amalgamation of these institutions into a coherent concept of fiduciary loyalty took centuries, and it took place primarily in Equity courts. The advantages of account notwithstanding, it was burdened with procedural drawbacks that had characterised the common-law system and motivated litigants to seek redress in Equity courts.128 While common-law courts continued to handle actions of account for some time,129 Equity eventually came to dominate accounting through its bill of account, which was more agile than the common-law action of account; the latter gradually declined. Equity’s takeover of account facilitated the integration of two bodies of knowledge: accounting and law. First, the Chancery had first-hand knowledge of the accounting process. The Chancellor or his deputy sat at the head of the table in the Royal Exchequer, right next to the Justiciar who presided over the session, and acted as a check on the Treasurer.130 Ecclesiastical estates were pivotal in the diffusion and development of manorial accounting from Exchequerian accounting (recall Walter of Merton). Secondly, the post of the Chancellor (in addition to the Master of the Rolls and other masters) was nearly always held by a clergyman. Being familiar with Roman law, either directly or through canon law,131 these officials were aware of several legal relationships that included liability to account and were handled by ecclesiastical courts.132 Referring to guardians and executors, Getzler argues with regard to the use of land that the Court of Chancery ‘could draw on a body of fiduciary accounting ideas to add to its own distinct theory of holding of land subject to duties of equitable conscience’.133 Equity was thus poised to further develop account and accountability. It is neither possible nor necessary to cover its full development here.134 Consider, superficially, two prominent examples, in which equity integrated a liability to account with the framework of charge and discharge accounting. First, the trust.135 Even before the trust matured, equity gave effective protection to a cestui que use, the precursor of the trust beneficiary with regard to land, in the form of account.136 That is, regardless of whether the use, and later the trust, evolved from the Roman fideicommissium or from other sources that entailed a duty to account, the key here is that the English account implemented charge and discharge accounting as described above. Fast-forwarding a few centuries, equity analogised from trustees to company directors of chartered companies.137 Unincorporated companies did not even call for analogy, as they relied on trustees under deeds of settlement.138 Directors’ accountability in both cases provided crucial means for regulating the agency problems that the (quasi-)corporate structure entailed.139 In Ex Parte Dale and Co, Fry J stated: What is a fiduciary relationship? It is one in respect of which if a wrong arise, the same remedy exists against the wrongdoer on behalf of the principal as would exist against a trustee on behalf of the cestui que trust.140 This famous dictum is accurate only in part, however. While courts have exported trustee-like obligations from the trust to other relations, the trustee’s core obligation—to account—was imported to the trust from earlier fiduciary-like relations. It is because of importing this obligation that the trustee is a fiduciary.141 From the bailiff to the trustee to the director to the generic fiduciary, the applicable accountability regime has remained stable. Thus, in Ultraframe (UK) Ltd v Fielding (No 2) Lewison J referred to a trustee to describe a director’s accounting,142and in Hall v Libertarian Investments Ltd Lord Millet NPJ discussed a generic fiduciary using terms that would have made any bailiff cringe: Trustees and most fiduciaries are accounting parties… the beneficiary or principal is entitled to an account as of right… Once the plaintiff has been provided with an account he can falsify and surcharge it. If the account discloses an unauthorised disbursement the plaintiff may falsify it, that is to say ask for the disbursement to be disallowed… He is entitled to ask for an inquiry to discover what the defendant did with the trust money… If on the other hand the account is shown to be defective because it does not include property which the defendant in breach of his duty failed to obtain for the benefit of the trust, the plaintiff can surcharge the account…143 The transformation of account, to borrow Stoljar’s words, with regard to fiduciary relations was characterised more by expansion than by transmutation. Both the underlying logic and the structure of accountability have changed remarkably little between the early 1200s and the early 2000s. This stability does not indicate stagnation or ossification, however. Over time, double-entry bookkeeping has replaced the single-entry method; generally accepted accounting principles of financial statements are constantly evolving; and the rules on what information is deemed material have also changed. These technical changes have not affected the need for full disclosure that stewardship accounting addresses, which remains as vital as ever. Prescriptive disclosure The preceding sections outline the evolution of accounting and the law of accountability. This analysis may be relevant for several current topics in fiduciary law. For example, in the light of Armitage v Nurse144 and Schmidt v Rosewood Trust Ltd,145 one might ask whether the irreducible core of fiduciary loyalty comprises full disclosure to the beneficiary, or at least to a supervising court.146 Or, in the wake of AIB Group (UK) Plc Ltd v Mark Redler & Co,147 and given profound changes during the 20th century in fault-based liability for economic loss, one might ask what should be the contours of liability for harm to fiduciary assets, bearing in mind that ‘account is not a remedy for wrong’.148 Recent contributions on this vast subject point to modes of accounting that were standard in the 19th century: account in common form and account founded on wilful default.149 Here it will be noted only briefly that it is the former account that particularly distinguishes fiduciaries from other parties who may need to disgorge illicit profits. Called for regularly or on demand and without allusion to any fault, one conjectures that it is the contemporary incarnation of the bailiff’s biannual account. This section considers another case in point, namely, the nature of the duty of loyalty as proscriptive or prescriptive, and maintains that a prescriptive duty of full disclosure is one of two pillars on which fiduciary loyalty rests, on equal footing with the proscription of conflict of interests. English law, especially after Item Software (UK) Ltd v Fassihi,150 considers full disclosure to be part of the duty of loyalty in that fulfilling this duty requires the fiduciary to provide the beneficiary with material information. So does the law in Delaware, where full candour is required from fiduciaries.151 A court in Canada has adopted the English approach,152 while in Scotland the question was left open.153 In contrast, Australian courts have rejected this proposition, albeit with varying degrees of explicitness or passion. The Australian stance rests on a more fundamental view of the duty of loyalty as proscriptive by nature—a view that does not easily accommodate a duty of full disclosure as a primary fiduciary obligation.154 At least since the Australian High Court’s decision in Breen v Williams, fiduciary loyalty is seen as exhausted by the proscriptive ‘no conflict’–‘no profit’ rules—a position that the Court recently reiterated.155 Scholars differ on this issue, too, either generally, as regards the proscriptive/prescriptive conundrum, or more specifically with regard to disclosure.156 The economic theory of opportunism teaches that self-interestedness and information asymmetries together engender opportunism in general and in principal-agent relations in particular. Eliminate one of these factors and the problem disappears. If the agent is not selfish, the principal does not care about not knowing about her deeds. If the principal can know everything about the deeds, selfish motivations can be blunted with appropriate incentives. It is the amalgam of the two factors that gives the agency problem its nasty properties. Any social institutional response seeking to effectively address the problem should therefore deal with both of them. The common-law regime of fiduciary loyalty does this most straightforwardly: it prohibits any pursuit of self-interest (or non-beneficiary interest), and it requires full disclosure by the fiduciary. The first prong aims to counteract self-interestedness; the second—information asymmetries. Between these two factors, self-interestedness may seem more vexing than information asymmetries. Selfishness elicits strong emotions and can sustain serious ethical debates.157 Information asymmetries might appear dull in comparison. Some courts indeed have tended to belittle the issue as an ordinary evidential difficulty.158 In academia, Langbein has dismissed the informational problem in the light of a ‘revolution in equity’s fact-finding’.159 Gilson and Schwartz downplay this issue in one article, yet acknowledge it formally in another.160 Such views are misguided, however. As it hinges on the reduction of information-gathering costs thanks to procedural advances, Langbein’s thesis applies to observable, though costly, information. It ignores unobservable and unverifiable information. Gilson and Schwartz are explicit about this gap. These views thus share a common weakness in that they assume away the problem. Abuse of fiduciary power thrives precisely on information asymmetries that these views deny or deny their importance. A social institutional response should therefore strive to minimise them as much as practical through full disclosure. Lord Eldon certainly did not downplay this problem. He underscored its severity especially with regard to unobservable and unverifiable information.161 Echoing the Seneschaucy on the irrelevance of the price in self-dealing and foreshadowing the ‘no further inquiry’ doctrine, Lord Eldon emphasised that the fairness of the transaction is immaterial because the court can never verify the full circumstances.162 The fiduciary ‘is out of the reach of investigation’, he said; ‘no Court is equal to the examination and ascertainment of the truth in much the greater number of cases’.163 This is a very different claim than, say, ‘the examination and ascertainment of the truth is too onerous for any Court’, as Langbein implies. Lord Eldon obviously did not discover information asymmetry nor did he design fiduciary accountability. His seminal contribution in this context—to which this article pays homage (and swears fealty)—lies in using principled reasoning to explicate its pernicious effect on fiduciary relations. In terms of legal doctrine, fiduciary law implements an equally strict approach to both prongs of the opportunism problem—the motivational and the informational. A fiduciary would be deemed to have breached the ‘no conflict’ rule even while acting in good faith and while bestowing benefits on the beneficiary.164 The prophylactic rationale that underlies the conflict-profit proscription165 motivates the duty of full disclosure just as forcefully. Inasmuch as prophylaxis is concerned, disclosure actually may have a stronger claim: ‘Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.’166 Or as Green J put it: ‘But the key is disclosure—”sunlight bleaches”.’167 Brandeis’s sunlight maxim reflects an important insight: that the beneficial effects of disclosure may go beyond equalising the information set of the parties. Disclosure may also affect motivations, ie self-interestedness, as it makes the agent’s conduct salient to herself and to others. Disclosure thus may inhibit socially condemned conduct at least among agents who are sensitive to the injunctive force of social norms—in this case, the norms of loyalty and accountability. Disclosure furthermore exposes the agent to informal enforcement as it may trigger opprobrium and shaming by other societal members and thus may facilitate compliance due to external social incentives. Disclosure is therefore expansive, nearly total, and surely above and beyond any measure of disclosure found in other legal contexts.168 Although ‘fishing expeditions’ are considered illegitimate, in the accounting process ‘[t]he Master has liberty to make a roaming inquiry regarding the assets the trustees should have received’.169 Courts have used similar terms without hesitation.170 Still, courts are not utopian. The reach of both prongs of fiduciary loyalty is delineated with the same yardstick of materiality. Where the ‘no conflict’ rule is concerned, there has to be ‘a real sensible possibility of conflict’.171 Similarly, ‘full disclosure’ or ‘utmost candour’ is satisfied if the fiduciary discloses all the material information.172 Full disclosure thus cannot be treated merely as a collateral duty supporting the prohibition of self-interestedness. Just as eliminating information asymmetries would undo opportunism, so would removing full disclosure cause the edifice of fiduciary loyalty to collapse. Loyalty without proactive accountability is meaningless. Thus, the development of accountability to charge all receipts and therefore encompass the residual financial interest in the manor, coupled with the Exchequerian mechanism of transparent audit, was crucial for direct farming of manorial firms. Manorial accountability, once perfected, could evolve into a general regime of accountability-based loyalty for partners, trustees and all other fiduciaries. This development in turn was linked with the institutionalisation of accountability as a generalised social norm rather than a secluded body of expert know-how. Had accountability not taken root as a social norm, it is hard to imagine the trust becoming so widespread in England without a shared understanding of what it entails for trustee conduct. As Matthews notes (perhaps with some hyperbole): Another aspect of the trust is cultural. Anglo-Saxons have grown up with trusts all around them. Everyone they know is either a trustee or a beneficiary, or both. Trusts are part of the history of the country, and part of the fabric of their society.173 That today one speaks about office holders as ‘discharging’ their ‘stewardship’ duties, unaware of this metaphor’s origins in the now-extinct charge and discharge accounting of feudal times, attests to the profound social impact of this institutionalisation process. What to make of the fact that fiduciary law deals proscriptively with self-interestedness but prescriptively with information asymmetries? With respect, not much. The basic point, that a fiduciary must not withhold material information with regard to her service as a fiduciary, has some solid references besides Fassihi and Hilton.174 Courts and scholars have also noted that a sharp proscriptive/prescriptive distinction becomes fuzzier and less defensible when one introduces the elusive omission/commission distinction into the analysis.175 These analytical impurities may stem from the fact that fiduciary accountability is an ancient legal regime, perfected in an era that did not neatly distinguish between right and remedy or performance and breach and still defies these distinctions. Instead, it comprises an array of rules that revolve around a continuous commitment to faithful service, at the core of which lies a continuous commitment to account. One may thus frame the ‘no profit’ rule not only as an elaboration of the proscriptive ‘no conflict’ rule but also as a derivative of a prescriptive ‘full disclosure’ rule, where ‘no profit’ means ‘no profit unless fully disclosed and authorised’. In either case, ‘no profit’ cannot serve as a complete substitute for the primary rule. The ‘full disclosure’ rule imposes on the fiduciary a broader, more fundamental obligation to account. Conclusion About 900 years ago, Roger of Salisbury had the ingenuity to put together several administrative components to create the Royal Exchequer as a novel audit apparatus for tax collection. A hundred years later, this organisational technology was upgraded to fit the task of manorial direct farming by adding a functionality of full disclosure, notwithstanding the inherent challenges of dealing with the information asymmetries that this entailed. Walter of Merton, among several others, may have contributed to spreading this technology, now deserving of the title ‘accountability’, throughout the country, leading to its becoming a social institution. These pioneering figures and their contemporaries may have been drawing inspiration from earlier, even ancient, sources in Roman and canon law. Be that as it may, the social institution of accountability and the legal regime of fiduciary loyalty that have thus emerged remain dependent on this disclosure-based infrastructure. Lord Eldon, writing some 200 years ago, was instrumental in this development. Granted, not every medieval practice or norm merits adhering to today, but few would deny that accountability does. I thank two anonymous referees, Matthew Conaglen, Luca Enriques, Joshua Getzler, Ewan McGaughey and participants at the LSE Corporate Law Roundtable and the UPF Workshop on Institutions and Organizations for their helpful comments. Accountability for all errors remains with me. Footnotes " 1 For clarity of analysis, I assume that ‘[a] fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’ in line with Bristol and West Building Society v Mothew [1998] Ch 1, 18 (Millett LJ). " 2 This concept is adopted, with agreement, from M Conaglen, Fiduciary Loyalty: Protecting the Due Performance of Non-Fiduciary Duties (Hart Publishing 2011). " 3 (1726) Sel Cas Ch 61. " 4 (1795) 3 ER 432, 446. " 5 [1896] AC 44, 51; see also Breen v Williams (1996) 186 CLR 71 [27]. " 6 (1802) 31 ER 1228, 1228. " 7 (1803) 32 ER 385. " 8 (1805) 32 ER 893. " 9 For earlier articulations of this idea see Whelpdale v Cookson (1747) 27 ER 856 (Hardwicke LC); York Buildings (n 4) 446; for an analysis see JS Getzler, ‘Rumford Market and the Genesis of Fiduciary Obligations’ in A Burrows and A Rodger (eds), Mapping the Law: Essays in Memory of Peter Birks (OUP 2006) 577. " 10James (n 7) 389. " 11 For surveys see P Aghion and R Holden, ‘Incomplete Contracts and the Theory of the Firm: What Have We Learned over the Past 25 Years?’ (2011) 25 Journal of Economic Perspectives 181; P Walker, ‘Contracts, Entrepreneurs, Market Creation and Judgement: The Contemporary Mainstream Theory of the Firm in Perspective’ (2015) 29 Journal of Economic Surveys 317. " 12 OE Williamson, The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting (Collier Macmillan Publishers 1985), 47. " 13 NJ Foss, H Lando and S Thomsen, ‘The Theory of the Firm’ in B Bouckaert and G De Geest (eds), Encyclopedia of Law and Economics (Edward Elgar 2000) vol 1, 632–3. " 14 O Hart, Firm, Contracts, and Financial Structure (OUP 1995); JC Stein, ‘Agency, Information and Corporate Investment’ in G Constantinides, M Harris and R Stulz (eds), A Handbook of the Economics of Finance: Corporate Finance (Elsevier 2003) 111. " 15 J Sobel, ‘Interdependent Preferences and Reciprocity’ (2005) 43 Journal of Economic Literature 392; S Della Vigna, ‘Psychology and Economics: Evidence from the Field’ (2009) 47 Journal of Economic Literature 315. " 16 NJ Higham, ‘The Domesday Survey: Context and Purpose’ (1993) 78 History 7; DC Douglas, William the Conqueror: The Norman Impact Upon England University of California Press 1964) 347–356; D Roffe, Domesday: The Inquest and the Book (OUP 2000) 54–70. " 17 JR Edwards, A History of Financial Accounting (Routledge 1989) 23–31; A Godfrey and K Hooper, ‘Accountability and Decision-Making in Feudal England: Domesday Book Revisited’ (1996) 1 Accounting History 35. " 18 S Harvey, Domesday: Book of Judgement (OUP 2014), 54; Godfrey and Hooper (ibid) 41. " 19 AR Bridbury, ‘Domesday Book: A Re-Interpretation’ (1990) 105 English Historical Review 284. " 20 On the Anglo-Saxon ‘farm’ (Old English feorm) see HR Loyn, Anglo-Saxon England and the Norman Conquest (2nd edn, Longman 1991) 314–15. " 21 PA Stafford, ‘The “Farm of One Night” and the Organisation of King Edward’s Estates in Domesday’ (1980) 33 Economic History Review 491; RS Hoyt, The Royal Demesne in English Constitutional History: 1066–1272 (Cornell UP 1950) 20–3; JL Grassi, ‘The Lands and Revenues of Edward the Confessor’ (2002) 117 English Historical Review 251, 259–63; J Getzler, ‘“As If” Accountability and Counterfactual Trust’ (2011) 91 BUL Rev 973, 977–8. " 22 Stafford (ibid) 501. " 23 J McDonald, ‘Efficiency in the Domesday Economy, 1086: Evidence from Wiltshire Eestates’ (2010) 42 Applied Economics 3231. " 24 RH Coase, ‘The Nature of the Firm’™ (1937) 4 Economica 386. " 25 WC Hollister and AC Frost, Henry I (AC Frost ed, Yale UP 2001) 216–217; MJ Jones ‘Origins of Medieval Exchequer Accounting’ (2009) 19 Accounting, Business and Financial History 259; MJ Jones, ‘The Role of Change Agents and Imitation in the Diffusion of an Idea: Charge and Discharge Accounting’ (2008) 38 Accounting and Business Research 355. " 26 Jones, ‘Origins’ (ibid); D Oldroyd, ‘Accounting in Anglo-Saxon England: Context and Evidence’ (1997) 2 Accounting History 18. " 27 Jones, ‘Origins’ (n 25) 271; RL Poole, The Exchequer in the Twelfth Century (Clarendon Press 1912) 42–46; MJ Jones, ‘The Dialogus de Scaccario (c1179): The First Western Book on Accounting?’ (2008) 44 Abacus 443, 462–3; WT Baxter, ‘Early Accounting: The Tally and Checkerboard’ (1989) 16 Accounting Historians Journal 43, 64–68. " 28 E Amt and SD Church (eds and trs), Dialogus de Scaccario, and Constitutio Domus Regis: The Dialogue of the Exchequer, and the Disposition of the King’s Household (OUP 2007). " 29 FS Thomas, The Ancient Exchequer of England; the Treasury; and Origin of the Present Management of the Exchequer and Treasury of Ireland (Petherham 1848) 21–22; see also SD Church, ‘The Exchequer Cloth, c1176–1832: The Calculator, the Game of Chess, and the Process of Photozincography’ in D Roffe (ed), The English and Their Legacy, 900–1200: Essays in Honour of Ann Williams (Boydell Press 2012) 245; Poole (n 27) 100–2; MH Mills, ‘Experiments in Exchequer Procedure (1200–1232)’ (1925) 8(4) Transactions of the Royal Historical Society 151. " 30 MT Clanchy, From Memory to Written Record, England 1066–1307 (3d edn, Blackwell 2013) 19; Z Razi and R Smith, ‘The Origins of English Manorial Court Rolls as a Written Record: A Puzzle’ in Z Razi and R Smith (eds), Medieval Society and the Manor Court (Clarendon Press 1996) 36, 37. " 31 Edwards (n 17) 33–4. " 32 S Carmona and M Ezzamel, ‘Accounting and Accountability in Ancient Civilizations: Mesopotamia and Ancient Egypt’ (2007) 20 Accounting, Auditing & Accountability Journal 177; GEM De Ste Croix, ‘Greek and Roman Accounting’ in AC Littleton and BS Yamey (eds), Studies in the History of Accounting (Richard D Irwin 1956) 14; D Rathbone, ‘Accounting on a Large Estate in Roman Egypt’ in R Parker and BS Yamey (eds), Accounting History: Some British Contributions (Clarendon Press 1994) 13; RH Macve, ‘Some Glosses on Greek and Roman Accounting’ in Parker and Yamey (ibid) 57; JD Edwards, ‘Early Bookkeeping and its Development into Accounting’ (1960) 34 Business History Review 446, 448–50. " 33 Edwards (n 17) 33. " 34 Jones, ‘Dialogue’ (n 27) 444–5; SM Jack, ‘An Historical Defence of Single Entry Book-Keeping’ (1966) 2 Abacus 137, 139–43, 158. " 35 R Brown, A History of Accounting and Accountants (Frank Cass 1968) 58; WT Baxter, ‘The Account Charge and Discharge’ (1980) 7 Accounting Historians Journal 69; WE Stone, ‘The Development of Charge and Discharge Accounting, 1183 to 1660’ (1993) 5 Accounting History 4. " 36 Thomas (n 29) 49; Poole (n 27) 127–8. " 37 Thomas (n 29) 49–51; Poole (n 27) 135–6. " 38 Thomas (n 29) 51–3. " 39 Thomas (n 29) 54–7; Jones, ‘Dialogue’ (n 27) 459–60; R Cassidy, ‘Adventus Vicecomitum and the Financial Crisis of Henry’s III Reign, 1250–1272’ (2011) 126 English Historical Review 614. " 40 Thomas (n 29) 56; Poole (n 27) 94–126. " 41 C Noke, ‘Respites in Charge and Discharge Statement’ (1996) 6 Accounting, Business and Financial History 247. " 42 Baxter (n 35) 75. " 43 JH Baker, An Introduction to English Legal History (Butterworths 2002) 23; see also Jones, ‘Dialogue’ (n 27) 467; Church (n 29) 247–8. " 44 DA Carpenter, ‘The Decline of the Curial Sheriff in England 1194–1258’ (1976) 91 English Historical Review 1, 1–2; J Sabapathy, Officers and Accountability in Medieval England 1170–1300 (OUP 2014) 82–7; WA Morris, The Medieval English Sheriff to 1300 (Manchester UP 1968). " 45 cf M Ezzamel, ‘Order and Accounting as Performative Ritual: Evidence from Ancient Egypt’ (2009) 34 Accounting, Organizations and Society 348. " 46 Carpenter (n 44) 3–5, 27; Jones, ‘Dialogue’ (n 27) 454; MJ Jones, ‘Sources of Power and Infrastructural Conditions in Medieval Governmental Accounting’ (2010) 35 Accounting, Organizations and Society 81, 91–2. " 47 Stein (n 14). " 48 Carpenter (n 44) 5, 24–7; Jones, ‘Dialogue’ (n 27) 467; Poole (n 27) 127–9. " 49 Baker (n 43) 16; A Harding, England in the Thirteenth Century (CUP 1993) 154–6. " 50 P Latimer, ‘Money and the English Economy in the Twelfth and Thirteenth Centuries’ (2011) 9 History Compass 246; BMS Campbell, ‘Factor Markets in England before the Black Death’ (2009) 24 Continuity and Change 79; M Bailey, The English Manor c1200–c1500 (Manchester UP 2002) 97–109; PDA Harvey, ‘The Manorial Reeve in Twelfth-Century England’ in R Evans (ed), Lordship and Learning: Studies in Memory of Trevor Aston (Boydell Press 2004) 125, 135–8. " 51 RA Bryer, ‘Accounting for the Social Relations of Feudalism’ (1994) 24 Accounting and Business Research 209; M Bailey, ‘The Concept of the Margin in the Medieval English Economy’ (1989) 42 Economic History Review 1. " 52 Bailey (n 50) 98. " 53 Bailey (n 51) 2–11; HS Bennett, Life on the English Manor: A Study of Peasant Conditions, 1150–1400 (CUP 1962) 41–60; E Miller and J Hatcher, Medieval England: Rural Society and Economic Change 1086–1348 (Routledge 2014) 189–99; SL Waugh, England in the Reign of Edward III (CUP 1991) 102–10. " 54 Bennett (ibid) 156–78; Bailey (n 50) 98–100. " 55 TFT Plucknett, The Medieval Bailiff (Athlone Press 1954) 3–5. " 56 Bailey (n 50) 99; Plucknett (ibid) 4–5. " 57 S Waugh, ‘Tenure to Contract: Lordship and Clientage in Thirteenth-Century England’ (1986) 11 English Historical Review 811, 817–18. " 58 HS Bennett, ‘The Reeve and the Manor in the Fourteenth Century’ (1926) 41 English Historical Review 358, 360; Harvey (n 50) 125. " 59 AD Chandler, Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge MA: Harvard UP 1977) 3. " 60 HT Johnson and RS Kaplan, Relevance Lost: The Rise and Fall of Management Accounting (Harvard Business School Press 1987) 6. See also AA Berle and GC Means, The Modern Corporation and Private Property (Harcourt, Brace & World 1932). " 61 Carmona and Ezzamel (n 32); Rathbone (n 32). " 62 R Gamauf, ‘Slaves Doing Business: The Role of Roman Law in the Economy of the Roman Household’ (2009) 16 European Review of History 331; JJ Aubert, ‘Dumtaxat de Peculio: What’s in a Peculium, or Establishing the Extent of the Principal’s Liability’ in P du Plessis (ed), New Frontiers: Law and Society in the Roman World (Edinburgh UP 2013) vol 10, 193. " 63 Waugh (n 53) 104: ‘No lord could outwit [the reeve]’; Plucknett (n 55) 6: ‘no auditor could unravel [the reeve’s] peasant cunning’; Aubert (ibid) 197: ‘No one except the slave in charge of the peculium may actually know with precision and accuracy what it is made of’. See also G Dari-Mattiacci, ‘Slavery and Information’ (2013) 73 Journal of Economic History 79, 83–6. " 64 Dari-Mattiacci (ibid) 97–8. Silver argues that the incentive problem was resolved by granting peculia to self-selling slaves. M Silver, ‘At the Base of Rome’s Peculium Economy’ (2016) 22 Fundamina 67. " 65 C Dyer, ‘The Ineffectiveness of Lordship in England, 1200–1400’ (2007) 196 Past and Present 69; cf P Roebuck, ‘Absentee Landownership in the Late Seventeenth and Early Eighteenth Centuries: A Neglected Factor in English Agrarian History’ (1973) 21 Agricultural History Review 1. " 66 D Oschinsky, Walter of Henley and Other Treatises on Estate Management and Accounting (Clarendon Press 1971); see also PDA Harvey, ‘Agricultural Treatises and Manorial Accounting in Medieval England’ (1972) 20 Agricultural History Review 173. " 67 Oschinsky (ibid) 341–2. " 68 M Carlin, ‘Cheating the Boss: Robert Carpenter’s Embezzlement Instructions (1261x1268) and Employee Fraud in Medieval England’ in B Dodds and CD Lidd (eds), Commercial Activity, Markets and Entrepreneurs in the Middle Ages (Boydell Press 2011) 183. " 69 Oschinsky (n 66) 395. " 70 Jones, ‘Diffusion’ (n 25) 366–8. " 71 A Dobie ‘The Development of Financial Management and Control in Monastic Houses and Estates in England c1200–1540’ (2008) 18 Accounting, Business and Financial History 141, 153–4. " 72 Jones, ‘Diffusion’ (n 25) 360–4; Bryer (n 51) 220–1; Baxter (n 35) 75; Bennett (n 53) 158, 189; Bailey (n 50) 97, 105, 109; Dobie (ibid) 144–5; A Dobie ‘The Role of the General and Provincial Chapters in Improving and Enforcing Accounting, Financial and Management Controls in Benedictine Monasteries in England 1215–1444’ (2015) 1 British Accounting Review 11; RH Jones, ‘Accounting in English Local Government from the Middle Ages to c1835’ (1985) 15 Accounting and Business Research 197, 206–8. " 73 PDA Harvey, Manorial Records (British Records Association Archives and the User 5, 1984) 5–7. " 74 Oschinsky (n 66) 213; see also Razi and Smith (n 30) 38–43; cf Harvey (n 66). " 75 Jack (n 34) 151. " 76 Bailey (n 50) 21–41. " 77 C Noke, ‘Accounting for Bailiffship in Thirteenth Century England’ (1981) 11 Accounting and Business Research 137, 141–3; Edwards (n 17) 35; Jack (n 34) 153. " 78 PDA Harvey, ‘Manorial Accounts’ in Parker and Yamey (n 32) 91. " 79 Carlin (n 68) 185; D Oschinsky, ‘Medieval Treatises on Estate Accounting’ (1947) 17 Economic History Review 52, 55. " 80 MH Mills, ‘The Reforms at the Exchequer (1232–1242)’ (1927) 10 Transactions of the Royal Historical Society (4) 111, 125, referring to the royal demesne experiment discussed below. " 81 Bennett (n 53) 190–1; Noke (n 77) 145; Bailey (n 50) 103; Edwards (n 17) 40; Jack (n 34) 139. On the audit proceedings see Brand (n 114) 51–3. " 82 Bailey (n 50) 104. " 83 C Briggs, ‘Monitoring Demesne Managers through the Manor Court before and after the Black Death’ in R Goddard, J Langdon and M Muller (eds), Survival and Discord in Medieval Society. Essays in Honour of Christopher Dyer (Brepols 2010) 179. " 84 FM Miley and AF Read, ‘Spies, Debt and the Well-Spent Penny: Accounting and the Lisle Agricultural Estates 1533–1540’ (2016) 26 Accounting History Review 83. " 85 C Noke, ‘Agency and the Excessus Balance in Manorial Accounts’ (1991) 21 Accounting and Business Research 339, 343–5; see also D Postles, ‘The Excessus Balance in Manorial Accounts’ (1981) 54 Bulletin of the Institute of Historical Research 105. " 86 Carpenter (n 44) 37. " 87 RC Stacey, ‘Agricultural Investment and the Management of the Royal Demesne Manors, 1236–1240’ (1986) 46 Journal of Economic History 919; Carpenter (n 44); BL Wild, ‘Royal Finance under King Henry III, 1216–72: The Wardrobe Evidence’ (2012) 65 Economic History Review 1380, 1380–4. " 88 AR Bridbury, ‘The Farming Out of Manors’ (1978) 31 Economic History Review 503, 514. cf Wild (ibid) 1383; Stacey (ibid) 923–32. " 89 Bridbury (ibid) 514–15; MM Postan ‘A Note on the Farming Out of Manors’ (1978) 31 Economic History Review 521, 522. " 90 Carpenter (n 44) 3, 19–21; Stacey (n 87) 922; Mills (n 80). " 91 BE Harris, ‘King John and the Sheriff’s Farms’ (1964) 79 English Historical Review 532. An even earlier attempt took place in the 1180s, but the sheriffs accounted for fixed rents. Morris (n 44) 28–9; D Miller ‘Farming of Manors and Direct Management’ (1973) 26 Economic History Review 138. " 92 Harris (ibid) 539–40. " 93 FL Ganshof, Feudalism (University of Toronto Press 1964) 27–68; M Bloch, Feudal Society (University of Chicago Press 1961) 145–89; C Stephenson, Mediaeval Feudalism (Cornell UP 1942) 18–21; K Pennington, ‘Feudal Oath of Fidelity and Homage’ in K Pennington and MH Eichbauer (eds), Law as Profession and Practice in Medieval Europe: Essays in Honor of James Brundage (Ashgate 2011) 93. " 94 Ganshof (n 93) 35. " 95 Ganshof (n 93); Pennington (n 93). " 96 Getzler (n 9) 590–7 advances four models for the sources of fiduciary obligations, including the feudal homage and fealty and the liability to account. Of these models, Mitchell prefers co-ownership relations. C Mitchell, ‘Equitable Compensation for Breach of Fiduciary Duty’ (2013) 66 Current Legal Problems 307, 308. " 97 Silver (n 64) 88 mentions Roman mutual loyalty oaths upon self-sale to slavery. Helmholz mentions oaths by Roman guardians to carry out their duties in the interests of the infant. RH Helmholz, ‘Roman Law of Guardianship in England, 1300–1600’ (1978) 52 Tul L Rev 223, 244. " 98 Harvey (n 50) 125. " 99 Oschinsky (n 66) 271. " 100 cf Getzler (n 21); PJ Millett, ‘Equity’s Place in the Law of Commerce’ (1998) 114 LQR 214; Hall v Libertarian Investments Ltd [2013] HKCFA 93 [153]–[154] (Lord Litton NPJ), [167] (Lord Millet NPJ). " 101 Harvey (n 50) 105–10; Bailey (n 50) 109. " 102 C Briggs, ‘Some Recent Trends in the Rural History of Medieval England’ (2016) University of Cambridge working paper. " 103 RC Palmer, English Law in the Age of the Black Death, 1348–1381: A Transformation of Governance and Law (University of North Carolina Press 1993) 76–8, 169–293. " 104 Waugh (n 57) 812–16. " 105 SJ Stoljar, ‘The Transformations of Account’ (1964) 80 LQR 203, 203–4; CHS Fifoot, History and Sources of Common Law: Tort and Contract (Greenwood Press 1949) 268; P Brand, Kings, Barons and Justices: The Making and Enforcement of Legislation in Thirteenth-Century England (CUP 2003) 65; Sabapathy (n 44) 38. " 106 Plucknett (n 55) 22–4; Brand (ibid) 65. The reeve was subject to seigniorial justice in the manor courts. " 107 Stoljar (n 105) 204. " 108 Getzler (n 22) 978. " 109 EO Belsheim, ‘The Old Action of Account’ (1932) 45 Harvard Law Review 466, 469. " 110 WM Lile, ‘Bills for Account’ (1922) 8 Va L Rev 181; JB Ames, Lectures on Legal History and Miscellaneous Legal Essays (HUP 1913) 116–21; CC Langdell, ‘A Brief Survey of Equity Jurisdiction (Part IV)’ (1889) 2 Harvard Law Review 241; see, more recently, SFC Milsom, Historical Foundations of the Common Law (2nd edn, Butterworths 1981) 275–82; J Eichengrun, ‘Remedying the Remedy of Accounting’ (1985) 60 Ind LJ 463; DJ Seipp, ‘Trust and Fiduciary Duty in the Early Common Law’ (2011) 91 BUL Rev 1011, 1034–5. " 111 For later periods Stoljar (n 105) remains the seminal study. " 112 Stoljar (n 105) 205, 213–14; Fifoot (n 105) 273–4; Milsom (n 110) 276; Plucknett (n 55) 25; Brand (n 105) 66. " 113 TFT Plucknett, ‘Words’ (1929) 14 Cornell Law Quarterly 263, 271, 272; Plucknett (n 55) 16–19. " 114 P Brand, ‘The Equity of the Common Law Courts’ in E Koops and WJ Zwalve (eds), Law & Equity: Approaches in Roman Law and Common Law (Martinus Nijhoff 2014) 39, 45–53; Getzler (n 9) 593–5. " 115 Brand (n 105) 66–9, 348–61, 403–4 argues that actions of account against guardians in socage were likely common in county courts. The socager swore an oath of fealty though he did not usually do homage. FM Maitland, The Constitutional History of England: A Course of Lectures Delivered (Law Book Exchange 2001) 31. " 116 Milsom (n 110) 280; Fifoot (n 105) 270–1. Brand (n 105) 402 documents earlier enforcement proceedings. " 117 Stoljar (n 105) 206. " 118 Stoljar (n 105) 213; Brand (n 114) 45–53; WS Holdsworth, ‘The Early History of Equity’ (1914–15) 13 Mich L Rev 293, 295. " 119 P Brand, ‘Merchants and their Use of the Action of Account in Thirteenth and Early Fourteenth Century England’, paper delivered at the University of London, 8 November 2013 <http://podcast.ulcc.ac.uk/accounts/SAScasts/medievalmerchantsandmoney/MMM_20131108_o_Brand.mp3> accessed 13 December 2016. " 120 J Biancalana, ‘Thirteenth-Century Custodia’ (2001) 22 Journal of Legal History 14, 23–4. " 121 P Brand, ‘Stewards, Bailiffs and the Emerging Legal Profession in Later Thirteenth-Century England’ in TH Aston and R Evans (eds), Lordship and Learning: Studies in Memory of Trevor Aston (Boydell Press 2004), 139, 143, 148–50; cf Plucknett (n 55) 15. " 122Dubai Aluminum Company Ltd v Salaam [2002] UKHL 48 [138] (Millet LJ). " 123 Milsom (n 110) 280–1; Fifoot (n 105) 272. " 124 Fifoot (n 105) 273; Milsom (n 110) 281. " 125 Fifoot (n 105) 269–70. " 126 Campbell (n 50); Latimer (n 50); D Routt, ‘The Late Medieval Countryside: England’s Rural Economy and Society, 1275–1500’ (2013) 11 History Compass 474; J Langdon and J Maaschaele, ‘Commercial Activity and Population Growth in Medieval England’ (2006) 190 Past and Present 35. " 127 cf Palmer’s theory on interrelations between legal, social and economic factors in the same period. RC Palmer, ‘The Economic and Cultural Impact of the Origins of Property: 1180–1220’ (1985) 3 LHR 375. On a norm of entrepreneurship in that period see Langdon and Maaschaele (ibid). Palmer’s timeline of economic events is debatable. P Latimer, ‘The English Inflation of 1180–1220 Reconsidered’ (2001) 171 Past and Present 3. " 128 Fifoot (n 105) 273–5; Belsheim (n 109) 499–500; Ames (n 110) 116–17. " 129 Stoljar (n 105) 218–21; Brand (n 114) 45–53; J Baker, Oxford History of the Laws of England, vol VI (OUP 2003) 875–8. " 130 Thomas (n 29) 5; Jones, ‘Dialogue’ (n 27) 454. " 131 TS Haskett, ‘The Medieval English Court of Chancery’ (1996) 14 LHR 245, 255–66; see also R Helmholz, ‘Trusts in the English Ecclesiastical Courts 1300–1640’ in R Helmholz and R Zimmermann (eds), Itinera Fiduciae: Trust and Treuhand in Historical Perspective (Duncker & Humblot 1998) 153, 157–60; J Biancalana, ‘Medieval Uses’ in Helmholz and Zimmermann (ibid) 111, 142–5. With regard to a later period see M Macnair, ‘Equity and Conscience’ (2007) 27 OJLS 659, 669–72; R Havelock, ‘The Evolution of Equitable “Conscience”‘ (2014) 8 J Eq 128; R Havelock, ‘Conscience and Unconscionability in Modern Equity’ (2015) 9 J Eq 1; G Dodd, ‘Reason, Conscience and Equity: Bishops as the King’s Judges in Later Medieval England’ (2014) 99 History 213. " 132 Helmholz (n 97); R Zimmermann, ‘Heres fiduciarius? Rise and Fall of the Testamentary Executor’ in Helmholz and Zimmermann (ibid) 278; J Biancalana, ‘Testamentary Cases in Fifteenth-Century Chancery’ (2008) 76 LHR 283. Query how much the clergy knew about accounting by Roman slaves with regard to the peculium. See Du Plessis (n 62) 195–7; WW Buckland, The Roman Law of Slavery: The Conditions of the Slave in Private Law from Augustus to Justinian (CUP 1908) 494–5. " 133 Getzler (n 22) 979–80; see also R Helmholz, ‘Trusts in the English Ecclesiastical Courts 1300–1640’ in Helmholz and Zimmermann (n 131) 153; J Biancalana, ‘Medieval Uses’ in Helmholz and Zimmermann (n 131) 111, 142–5. " 134 On early stages of accounting in non-fiduciary contexts see Stoljar (n 105); see generally P Devonshire, Account of Profits (Thomson Reuters 2013). " 135 In considering it, ignore its proprietary features. See eg Biancalana (n 131); M Macnair, ‘The Conceptual Basis of Trusts in the Later 17th and Early 18th Centuries’ in Helmholz and Zimmermann (n 131) 207, 213–15, 227–9; NG Jones, ‘Uses, Trusts and a Path to Privity’ (1997) 56 CLJ 175, 176–82; S Herman, ‘Utilitas Ecclesiae: The Canonical Conception of the Trust’ (1996) 70 Tul L Rev 2239. " 136 WS Holdsworth, A History of English Law, vol 3 (3rd edn, Methuen 1923) 426; Jones (ibid) 189–91; on account in custodia see Biancalana (n 120). " 137Charitable Corporation v Sutton (1742) 26 ER 642; see also Regal (Hastings) Ltd v Gulliver [1967] AC 134. See eg Getzler (n 9) 595–6; LS Sealy, ‘The Director as Trustee’ [1967] CLJ 83; R Nolan ‘Regal (Hastings) Ltd v Gulliver (1942)’ in C Mitchell and P Mitchell (eds), Landmark Cases in Equity (Hart Publishing 2012) 499. " 138 Here, too, one can ignore the proprietary/entity aspects of the corporate form. See eg R Harris, Industrializing English Law: Entrepreneurship and Business Organization, 1720–1844 (CUP 2000) 137–44; see also J Getzler and M Macnair, ‘The Firm as an Entity before the Companies Acts’ in P Brand, K Costello and WN Osborough (eds), Adventures of the Law: Proceedings of the Sixteenth British Legal History Conference, Dublin, 2003 (Four Courts Press 2005) 267. " 139 Recent studies examine contractual and statutory measures, drawing on R La Porta and others, ‘Law and Finance’ (1998) 106 Journal of Political Economy 1113. R Harris, ‘The Private Origins of the Private Company: Britain 1862–1907’ (2013) 33 OJLS 339; J Foreman-Peck and L Hannah, ‘Some Consequences of the Early Twentieth-Century British Divorce of Ownership from Control’ (2013) 55 Business History 543; T Guinnane, R Harris and NR Lamoreaux, ‘Contractual Freedom and the Evolution of Corporate Governance in Britain, 1862 to 1929’ (2014) NBER Working Paper 20481; J Foreman-Peck and L Hannah, ‘UK Corporate Law and Corporate Governance before 1914: A Re-interpretation’ (2015) EHES Working Paper 172; GG Acheson, G Campbell and JD Turner, ‘Common Law and the Origin of Shareholder Protection’ (2016) QUCEH Working Paper 2016-04. These measures are at best controversial. The more advanced approach focuses on curbing self-dealing, which is at the heart of fiduciary loyalty. S Djankov and others, ‘The Law and Economics of Self-Dealing’ (2008) 88 Journal of Financial Economics 430. " 140 (1879) 11 Ch 772, 778; see also Gwembe Valley Development v Koshy [2003] EWCA Civ 1048 [89]; Hospital Products (n 1) [28]; JJ Harrison (Properties) Ltd v Harrison [2001] EWCA Civ 1467 [27]. For discussions see eg LS Sealy, ‘Fiduciary Relationships’ (1962) 20 CLJ 69, 72–3; EJ Weinrib, ‘The Fiduciary Obligation’ (1975) 25 UTLJ 1, 5; P Birks, ‘The Content of Fiduciary Obligation’ (2000) 34 Israel Law Review 3, 8. " 141 cf Mothew (n 1) 18. " 142 [2005] EWHC 1638 (Ch) [1513], [1516]. " 143Libertarian (n 100) [167]–[170]. " 144 [1997] EWCA Civ 1279, [1998] Ch 241, 253–4 (Millet LJ). " 145 [2003] UKPC 26 [51] (Lord Walker). " 146 I believe that it does. See AN Licht, ‘Motivation, information, negotiation: Why fiduciary accountability cannot be negotiable’ in A Gold and DG Smith (eds), Research Handbook on Fiduciary Law (Elgar, forthcoming); R Chambers, ‘Liability’ in P Birks and A Pretto (eds), Breach of Trust (Hart Publishing 2002) 1, 7; D Hayton, ‘The Irreducible Core Content of Trusteeship’ in AJ Oakley (ed), Trends in Contemporary Trust Law (Clarendon Press 1996) 47, 53; Hilton v Barker Booth & Eastwood [2005] UKHL 8 [31] (Walker LJ); J Getzler, ‘Inconsistent Fiduciary Duties and Implied Consent’ (2006) 122 LQR 1; cf R Nolan, ‘“The Execution of a Trust Shall Be under the Controul of the Court”: A Maxim in Modern Times’ (2016) 2 Canadian Journal of Comparative and Contemporary Law 469. " 147 [2014] UKSC 58. " 148Libertarian (n 100) [167]. " 149 M Conaglen, ‘Equitable Compensation for Breach of Trust: Off Target’ (2016) 40 MULR 126; J Edelman, ‘An English Misturning with Equitable Compensation’ in S Degeling and J Varuhas (eds), Equitable Compensation and Disgorgement of Profit (Hart Publishing 2017); see also J Penner, ‘Falsifying the Trust Account and Compensatory Equitable Compensation’ in Degeling and Varuhas (ibid). " 150Item Software (UK) Ltd v Fassihi [2004] EWCA Civ 1244 [41] (Arden LJ); see also Hilton (n 146). " 151Malone v Brincat, 722 A.2d 5, 13–14 (Del 1998) (Holland J). " 152Procon Mining & Tunnelling Ltd v McNeil, 2010 BCSC 487 [132]–[137] (Ross J). " 153Commonwealth Oil & Gas Co Ltd v Baxter [2009] CSIH 75 [82] (Lord Nimmo Smith). " 154Breen (n 5) [41]–[42] (Gaudron and McHugh JJ); Pilmer v Duke Group [2001] HCA 31 [128] (Kirby J); Friend v Brooker [2009] HCA 21 [84]; The Bell Group Ltd (In Liq) v Westpac Banking Corporation [2001] WASC 315 [192] (Owen J); P & V Industries Pty Ltd v Porto [2006] VSC 131 [23]–[25] (Hollingworth J); P & V Industies Pty Ltd v Porto (No 2) [2007] VSC 64 [29] (Hollingworth J); Westpac Banking Corporation v The Bell Group Ltd (in liq) (No 3) [2012] WASCA 157 [1957]–[1977] (Drummond AJA); Howard v Commissioner of Taxation [2014] HCA 21 [56] (Hayne and Crennan JJ); DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2015] WASC 105 [52]–[55] (Le Miere J). " 155Howard (ibid). cf Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628 [31]–[33] (Finkelstein J). In ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65 [1072]–[1081], the Federal Court of Australia referred to a ‘fiduciary’s obligation to disclose the conflict’. " 156 See generally JD Heydon, ‘Modern Fiduciary Liability: The Sick Man of Equity?’ (2014) 20 Trusts and Trustees 1; Getzler (n 1) 42–4; L Smith, ‘Can We Be Obliged to Be Selfless?’ in A Gold and P Miller (eds), Philosophical Foundations of Fiduciary Law (OUP 2014); L Smith, ‘Deterrence, Prophylaxis and Punishment in Fiduciary Obligations’ (2013) 7 J Eq 37; Conaglen (n 2) 201–3; M Conaglen, ‘Interaction between Statutory and General Law Duties Concerning Company Director Conflicts’ (2013) 31 C&SLJ 403; D Jensen, ‘Prescription and Proscription in Fiduciary Obligations’ (2010) 21 King’s Law Journal 333. On disclosure see J Lowry, ‘The Duty of Loyalty of Company Directors: Bridging the Accountability Gap through Efficient Disclosure’ (2009) 68 CLJ 607; M Harding, ‘Two Fiduciary Fallacies’ (2007) 2 J Eq 1; L Ho and PW Lee, ‘A Director’s Duty to Confess: A Matter of Good Faith?’ (2007) 66 CLJ 348; A Berg, ‘Fiduciary Duties: A Director’s Duty to Disclose His Own Misconduct’ (2005) 121 LQR 213; J Armour and M Conaglen, ‘Directorial Disclosure’ (2005) CLJ 48; RC Nolan, ‘A Fiduciary Duty to Disclose?’ (1997) 113 LQR 220; L Smith, ‘The Motive, Not the Deed’ in J Getzler (ed), Rationalizing Property, Equity and Trusts: Essays in Honour of Edward Burn (LexisNexis Butterworths 2003) 53. " 157 For a review see PB Miller, ‘Justifying Fiduciary Duties’ (2013) 58 Mcgill LJ 969; see also Conaglen (n 2) 67–79; Smith, ‘Selfless’ (n 156); Smith, ‘Motive’ (n 156); I Samet, ‘Guarding the Fiduciary’s Conscience: A Justification of a Stringent Profit-stripping Rule’ (2008) 28 OJLS 763; A Laby, ‘Resolving Conflicts of Duty in Fiduciary Relationships’ (2004) 54 Am U L Rev 75. " 158Holder v Holder [1968] Ch 353, 398 (Danckwerts LJ). " 159 JH Langbein, ‘Questioning the Trust Law Duty of Loyalty: Sole Interest or Best Interest?’ (2005) 114 Yale LJ 929, 944–50; see also AD Hicks, ‘The Remedial Principle of Keech v Sandford Reconsidered’ (2010) CLJ 287, 293. Getzler (n 9) 586–9 provides a fuller analysis; see also Getzler (n 22) 986–7; C Mitchell, ‘Causation, Remoteness and Fiduciary Gains’ (2006) King’s Law Journal 325, 326. " 160 cf RJ Gilson and A Schwartz, ‘Constraints on Private Benefits of Control: Ex Ante Control Mechanisms versus Ex Post Transaction Review’ (2013) 169 Journal of Institutional and Theoretical Economics 160, 167; RJ Gilson and A Schwartz, ‘Corporate Control and Credible Commitment’ (2015) 43 International Review of Law and Economics 119, 122. " 161Lacey (n 6) 1228, quoted above; James (n 7) 345; Bennett (n 8) 400; see also Furs Ltd v Tomkies (1936) 54 CLR 583, 592 (Rich, Dixon and Evatt JJ); Gwembe (n 140) [44]; R Flannigan, ‘The Adulteration of Fiduciary Doctrine in Corporate Law’ (2006) 122 LQR 449, 451. " 162 See eg James (n 7) 388; Aberdeen Railway Company v Blakie Brothers [1854] UKHL 1, (1854) 1 Macq 461, 471 (HL) (Lord Cranworth LC), citing James. " 163James (n 7) 388; see also Bennett (n 8) 400. " 164Boardman v Phipps [1967] 2 AC 46; Regal (Hastings) (n 137); cf Murad v Al-Saraj [2005] EWCA Civ 959 [81]–[83] (Arden LJ); Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200 [76]–[77] (Moses LJ). " 165Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 [404]–[420] (Heydon JA); Conaglen (n 2) 194; Smith, ‘Prophylaxis’ (n 156); J Getzler, ‘Am I My Beneficiary’s Keeper? Fusion and Loss-based Fiduciary Remedies’ in S Degeling and J Edelman (eds), Equity in Commercial Law (Thomson LBC 2005) 239. " 166 LD Brandeis, Other People’s Money and How the Bankers Use It (Stokes 1914) 62. " 167The Northampton Regional Livestock Centre Company Ltd v Cowling [2014] EWHC 30 [6] (QB), reversed on other grounds in The Northampton Regional Livestock Centre Company Ltd v Cowling [2015] EWCA Civ 651. " 168 cf in non-fiduciary relations, where disclosure has been questioned, O Ben-Shahar and CE Schneider, More than You Wanted to Know (Princeton UP 2014). " 169 Chambers (n 146) 19 (emphasis added), following Glazier v Australian Men’s Health (No 2) [2001] NSWSC 6 [42], reversed on other grounds in Meehan v Glazier Holdings Pty Limited [2005] NSWCA 24. " 170Bartlett v Barclays Bank Trust Co Ltd (No 2) [1980] 2 All ER 92, 97; Coulthard v Disco Mix Club Ltd [1999] 2 All ER 457, 481. " 171Boardman (n 164) 124 (Upjohn LJ); see also M Conaglen, ‘The Extent of Fiduciary Accounting and the Importance of Authorisation Mechanisms’ (2011) 70 CLJ 548, 551. " 172Furs (n 161) 592; Fitzwood (n 155) [31]; Gwembe (n 140) [44], [65]; see also Rosenblatt v Getty Oil Co, 493 A.2d 929, 944 (Del Sup 1985). " 173 P Matthews, ‘The Place of the Trust in English Law and in English Life’ (2013) 19 Trusts & Trustees 242, 245. " 174Fassihi (n 150); Hilton (n 146). See eg London Loan & Savings Co v Brickenden [1934] 3 DLR 465, 468 (PC); Nocton v Lord Ashburton [1914] AC 932, 965 (HL). " 175DFD Rhodes (n 154) [53]; Pilmer (n 154) [127]; Getzler (n 9) 595; L Fioris, ‘Precluding Prescriptive Duties in Fiduciary Relationships: The Problems with the Proscriptive Delimitation’ (2012) 40 ABLR 166, 167–70. © The Author(s) 2017. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
TI - Lord Eldon Redux: Information Asymmetry, Accountability and Fiduciary Loyalty
JO - Oxford Journal of Legal Studies
DO - 10.1093/ojls/gqx003
DA - 2017-12-01
UR - https://www.deepdyve.com/lp/oxford-university-press/lord-eldon-redux-information-asymmetry-accountability-and-fiduciary-g63MkniIqT
SP - 770
VL - 37
IS - 4
DP - DeepDyve
ER -