A sharp distinction must be made between the concepts of « firm » and of « corporation ». The firm is an organization performing an economic activity. The corporation is a type of legal person, most firms of some significance being organized using corporations. A World Wide Web of Contracts is in existence which connects almost everyone to almost everyone. In this web of contracts, some are pure sale and purchase contracts. At the other end of the spectrum, one finds relatively stable clusters of long-term contracts. Some are the contractual substratum of business firms. The Chapter goes on explaining the legal structure of the unincorporated business firm, its position in the World Wide Web of Contracts and the notion of the firm’s limits. It then explains the incorporation process and what changes when a corporation is used to legally structure a business firm. The importance for the corporation to be a legal person is stressed and the fact that the incorporation leads to two separate forms of property rights linked to the same assets - the property right over the productive assets and the property right over the shares of stock issued by the corporation - is explained.
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