In closely held corporations, shareholder oppression law provides an equitable alternative to contract law for minority shareholders. However, the noncontractual nature of oppression law can be overstated. Two types of contractual analysis appear frequently in oppression cases: (1) pragmatic efforts to ascertain the minority’s reasonable expectations based on evidence of shared understandings between the parties; and (2) formalistic insistence that contract law rules curtail the minority’s reasonable expectations.

These two approaches conflict with each other and have created confusion. There is a crucial difference between using contractual analysis to assess the parties’ reasonable expectations and allowing formalistic contract rules to substitute for a full evaluation of the parties’ bargain. This Article argues that contractual formalism repositions the chief criticism of the shareholder oppression doctrine — that a corporation’s shareholders could have negotiated adequate protection before investing — as the doctrine itself. By contrast, a pragmatic interpretation of reasonable expectations serves the equitable purpose of shareholder oppression law and empowers courts to achieve justice between the parties.