There is case law to the effect that when companies are in financial difficulty directors owe a duty to take into account the interests of their companies' creditors. This article examines the primary reasons why contractarian theory, as applied by the law and economics school, is opposed to the...

It is a principle of UK law that when companies are financially distressed to the point of being insolvent or close to it the directors of such companies are required to take into account the interests of creditors. This is now codified in s.172(3) of the Companies Act 2006. In recent times...