Company Law

2049 WordsApr 10, 20139 Pages
Issue The issue here is whether john could prevail in court by alleging the he was breach the contract with Diamond Car Sales, does he should stop his trading. This essay will apply law theory and precedent cases to distinguish john case. The principle of corporate entity was established in the case of Salomon v A. Salomon, now referred to as the 'Salomon' principle Legal The House of Lords’ decision in Salomon v A Salomon & Co Ltd [1897] established the separate identity of the company. Salomon v A Salomon & Co Ltd [1897] AC 22 is a landmark UK company law case. The effect of the Lords' unanimous ruling was to uphold firmly the rule of corporate personality, as set out in the Companies Act 1862, so that creditors of an insolvent…show more content…
The company policy was after leaving the company, cannot get such business competing with Gilford motors ltd, so Horne was leaving the job, and built a new company, his wife was the director, and Horne began working for the new company. The court held although Horne was not a shareholder or director in was wife’s company, it was clearly a sham company formed to avoid an equitable obligation. The court set aside the separate legal personality of the Company and said the new company: “Was formed as a device, a stratagem, in order to mask the effective carrying on of a business of Mr E. B. Horne. The purpose of it was to try to enable him, under what is a cloak or a sham, to engage in business which, on consideration of the agreement which had been sent to him just about seven days before the company was incorporated, was a business in respect of which he had a fear that the plaintiffs might intervene and object. The company was belonged to Horne, and the court piercing the veil, and rescind the separate corporate personality of Horne’s company. And he was breach the contract with Gilford Motors Ltd., in which the defendant attempted to evade his obligations under a contract not to compete with the plaintiff, but carried on a competing business with a company in which all shares were owned by his wife. It was held that the company was
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