One popular theory of the corporation is that it is a nexus of contracts.  As Frank Easterbrook and Daniel Fischel pithily pronounced "Corporations are enduring (relational) contracts."  F. Easterbrook and D. Fischel, The Economic Structure of Corporate Law, 90 (1991).   If that is the case, then it is anomalous indeed that so much corporate litigation involves tort claims (fiduciary duty, fraud, etc.) rather than contract claims.

When it comes to shareholder versus shareholder claims, California practitioners will know that in some circumstances controlling shareholders may owe a fiduciary duty to another shareholder.  Thus, the California Supreme Court has held that controlling shareholders may not use their power to control the corporation for the purpose of promoting a marketing scheme that benefits themselves alone to the detriment of the minority.  Jones v. H.F. Ahmanson & Co., 1 Cal.3d 93, 115 (1969).  

Is it possible that a shareholder could sue another shareholder in contract rather than tort?  The answer, of course, will be "yes" if the shareholders are parties to a contract such as a shareholders' agreement.  What if there is no such agreement, might there still be a contract?  One possibility is the Bylaws.  In this earlier post, I noted that the Court of Appeal  has unequivocally held that the Bylaws constitute a contract between a nonprofit corporation and each of its members.  Cobb v. Ironwood Country Club, 233 Cal. App. 4th 960 (2015).  But might the Bylaws also be a contract among the members ?  If so, then action by one shareholder in contravention of the Bylaws could be grounds for a breach of contract claim by the other shareholders.  

Characterizing Bylaws as a contract has numerous implications.  For example, it would seem to require that the courts apply the rules governing the interpretation of contracts, the statute of limitations applicable to contracts, contractual defenses, and the implied covenants of good faith and fair dealing.  Previously, I have questioned why, if bylaws are contracts, they do not include the usual contractual boilerplate.  

[View source.]