In a new article, we argue that business law’s division into separate disciplines obscures shared problems and generates unnecessary costs. Commercial, financial, bankruptcy, securities, and business-organization law developed largely independently, each responding to particular activities and historical circumstances. Yet these fields repeatedly confront similar difficulties involving information asymmetries, coordination problems, conflicting incentives, and parallel risks.

We propose a more integrated legal framework for viewing business law, with the goals of improving efficiency by reducing overlap among the constituent fields, increasing consistency, and more widely disseminating advances across those fields. We mean to merely supplement, not replace, existing regulation, as well as to guide interpretation and encourage useful exchanges across the business-law disciplines.

The fragmentation of business law produces overbroad rules, excessive exemptions, and inconsistent treatment. The Investment Company Act’s overbroad definition of securities, for example, inadvertently covers financial assets purchased by securitization vehicles, potentially subjecting those vehicles to excessive regulation even though their use can reduce information asymmetry. Conversely, bankruptcy-law “safe harbor” exemptions for derivatives and securities contracts have expanded beyond their original systemic-risk justification, excluding ordinary financial transactions from important bankruptcy protections. However, removing bankruptcy’s protections can itself amplify instability. Bankruptcy law can also override commercial-law expectations concerning the finality of payments and other transactions, the priority of collateral, and foreclosure rights, increasing uncertainty for creditors (and thus the cost of credit). Fragmentation also affects collateral: Commercial law recognizes security interests as reducing credit risk, while financial regulation may withhold favorable treatment when collateral lacks liquidity.

We situate our analysis within the broader scholarship that identifies connections across legal fields, including Dworkin’s argument that legal rules should be interpreted as part of a coherent whole rather than as isolated rules, Calabresi and Melamed’s demonstration of how conflicts over entitlements connect property and tort law, and Coase’s insights on transaction-cost reduction as a guiding principle to help evaluate how well the law promotes efficient outcomes. These perspectives inform how the various business-law fields can be seen as connected through their shared functions, including their allocation and protection of economic rights.

We acknowledge the limits of overarching theories. Complex legal institutions cannot necessarily be explained by a single principle. Our ambition is merely to reveal meaningful commonalities that could improve the understanding and reform of business law, while respecting justified differences.

We also take a historical perspective, showing that today’s divisions between the business-law fields reflect path dependence more than differences in the underlying problems these fields address. For example, commercial law emerged from merchant practices that developed de facto rules facilitating predictable exchanges. Financial law evolved through banking practices as well as ad hoc responses to monetary instabilities and financial crises. Bankruptcy law arose from early efforts to punish bankrupt debtors and liquidate bankrupt firms, adapting towards debt restructuring and corporate reorganization once large businesses became more critical to economic prosperity. Securities regulation developed its disclosure and market-integrity focuses in response to investment frauds, securities market crashes, and individual investor vulnerability.

These separate histories help to explain, but do not fully justify, the division of business law’s fields. Functionally, each such field could inform the others. For example, commercial law’s focus on reducing contracting costs through default terms, warranties, and emphasis on transactional finality could improve transfers in other business-law fields. Bankruptcy law’s resolution of holdout problems could inform the resolution of similar problems, including those involving other dispersed stakeholders. Securities law’s focus on disclosure and antifraud mechanisms could improve lending arrangements. Business-organization law’s protection under the business judgment rule for good faith, nonconflicted, decisionmakers could improve the decision-making of servicers, indenture trustees, and similar agents by encouraging their beneficial exercise of judgment.

We also consider the substantive grounds for regulatory intervention. Traditional market-failure analysis assumes that private actors generally arrange efficient transactions absent market failures. Information asymmetry, for example, reflects the failure that sellers may know more about the goods being sold than buyers and that issuers of securities know more about their financial condition than investors. Warranties and disclosure requirements normally respond to these imbalances. Increasing complexity, however, can not only limit disclosure’s effectiveness but also create mutual misunderstandings—that even sophisticated participants may not always fully understand what is being bought and sold.

The usual economics categorization of market failures is somewhat imprecise. For example, “externalities” are not actually market failures but, rather, consequences of those failures. Furthermore, traditional market-failure categories provide an incomplete regulatory foundation, not only sometimes relying on simplified assumptions but also overlooking the goals of fairness and social welfare. We would add what we call “private-ordering failures” to justify regulation.

For instance, risk marginalization can occur when investment diversification makes individual investments too small to justify independent investigation, encouraging investors to rely on models, ratings, or simply herd behavior. Behavioral limitations—including overoptimism, confirmation bias, and reliance on past experience—can distort risk assessments. Collective-action problems can prevent parties from coordinating beneficial outcomes. Complexity can amplify these difficulties and transmit disturbances throughout interconnected systems.

Conflicts of interest can present a variety of private-ordering failures. Most attention has been devoted to agency conflicts between shareholders and managers, but increasing complexity of financial products increases the potential for conflicts between a firm’s middle and senior managers. Middle managers with the technical expertise to understand the benefits and risks of highly complex investments sometimes emphasize the benefits while downplaying (or ignoring) tail risk. This occurred, for example, with the highly leveraged CDO products whose failures contributed to the 2008 financial crisis. Senior managers were told that these securities were highly rated, had low mathematically modeled risk, and bore high rates of return. However, the failure of certain assumptions underlying those models ultimately caused these securities to default or to be downgraded, with devastating consequences. Many middle managers who recommended them, without always fully disclosing the risks, had already received bonuses or had left for other firms.

Another even broader conflict of interest can arise between firms and the public. For example, systemically important firms normally take risks to maximize shareholder return, without necessarily taking into account any public harm of that risk-taking.

Taken together, these problems indicate that regulators and scholars should take a more expansive and functional view of the business-law fields, which looks across traditional disciplinary boundaries. Such a view would not only provide a more coherent understanding of business law but also explain why certain business-law rules are overinclusive or underinclusive, how inconsistencies across legal fields can distort behavior, and how advances developed in one legal field can and should be adapted in others.

Steven L. Schwarcz is the Stanley A. Star Distinguished Professor of Law & Business at Duke University School of Law, and Isabelle Stewart is a 2026 J.D. graduate from Duke University School of Law and an associate at Vinson & Elkins LLP. This post is based on their new article, “Towards a Unified Theory of Business Law,” forthcoming in the Stanford Journal of Law, Economics and Business and available here.