The classic rhetoric of Cardozo in Meinhard v Salmon hides a delicate economic intuition justifying broad fiduciary obligations. This lesson parses closely the text of the dissent and the majority to recognize the idiosyncratic facts that make this a pivotal case. The focus is on the economic ramifications of Cardozo's choice.
On completion of the lesson, the student will be able to:
1. State the majority decision in Meinhard v. Salmon.
2. Explain the reasoning of the majority decision.
3. List the major points of the dissent.
4. Analyze whether the broad fiduciary obligations of Cardozo (majority) are better than the narrower fiduciary obligations of Andrews (dissent)?
5. Examine the application of Coasean irrelevance.
6. Examine the role of transaction costs.