Document Type



This Article argues that the methodological constraints of the Imperative have abandoned its underlying goals of certainty and stability in financial markets. Therefore, a new paradigm is needed that will enable courts to allocate rights and remedies in accordance with the economic substance of arrangements, and thus better enhance market stability.

This Article proceeds as follows: Part II articulates the jurisprudential underpinnings of the Imperative. Part III examines the economic theory and assumptions reflected in Imperative-driven decisions, as well as the interpretive methodology that has evolved across a range of judicial decisions and legislative enactments. Part IV introduces a recent case that exemplifies the current state of corporate finance jurisprudence under Imperative driven methodologies, and provides a brief overview of the methods by which courts typically construe financing agreements under strict interpretive norms. Part V proffers an alternative decisional paradigm that is designed both to enable courts to engage in a more expansive analysis and also to empower courts to allocate legal rights and remedies in a manner that is consistent with the actual economic arrangement of the parties. Part VI concludes with a recommendation that this more expansive approach may be more apt to enhance stability in financial markets.