Research Handbooks in Corporate Law and Governance series
Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 20: Dictum in alternative entity jurisprudence and the expansion of judicial power in Delaware
In the common law tradition, under the doctrine of stare decisis, a judicial decision is binding precedent for future cases involving similar issues and circumstances. Yet, only that portion of a court’s opinion that is the holding—namely the ultimate result of the case as well as those portions of the decision necessary to obtain that result—is considered binding precedent. Obiter dictum, or more simply dictum, is that part of a court’s opinion that is unnecessary to the ultimate result of the decision. Unlike the holding, dictum has no precedential value. It is not binding on future cases. Despite this fact, curiously, Delaware courts regularly indulge in dictum. Indeed, the judicial practice is a celebrated facet of the state’s rich corporate law tradition. Academics, practitioners and jurists alike have praised the state courts’ liberal use of dictum as a distinguishing and invaluable feature of Delaware corporate law and its law-making process. Less noticed, however, is dictum’s importance in Delaware’s burgeoning unincorporated alternative entity jurisprudence. As this chapter shows, when one probes Delaware’s limited partnership (“LP”) and limited liability company (“LLC”) decisions, one sees the same judicial hallmarks of dictum familiar to the state’s corporate law precedents.
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