Virtual Corporations--No Time for Trust‪?‬

ABSTRACT Virtual Corporations (VC's) are temporary flexible networks, dependent on mutual trust, and linked by information technology for the purpose of exploiting fast changing market opportunities. However, the very characteristics which make them so effective at exploiting fast-changing opportunities can create legal difficulties relative to the creation of a legal entity whose rights and duties can be established in a court of law. Specifically, it seems likely that such entities may increasingly be created via "virtual documents" using information technology in addition to, or instead of, conventional paper documents. This may bring into question the validity of the instrument which created the entity and therefore the legal existence of the entity itself. In addition, the creation of an entity via information technology can lead to jurisdictional disputes if problems arise. This paper examines whether VC's can establish an "electronic document" which is enforceable under current law. It also makes recommendations as to what elements might be included in such a document in order to avoid difficulties relative to enforcement and to a lesser extent jurisdiction.