The Corporate Veil : Saloman And Beyond

Thus far, case law denotes that the doctrine of privty conjured up many criticisms. Prior to the contracts (Rights of Third Parties) Act 1999 a great array of problems with the docterne was evident. This could largely be broken down into four key issues . Firstly , the doctrine provided many examples of failing to honour intentions of parties. In Tweedle, the DoP obstructed the intentions of the contracting parties and agreements were frustrated by the DoP . Secondly, When courts tried to divert the DoP around its obstacles for third parties, issues arose as it was very complex, artificial and as seen in the case of New Zealand Shipping Company - doubt was placed as to whether it was even possible. It was found far too complex a task to give effect to the parties intentions.Thirdly, it was thought outrageous in circumstances were a person who had suffered no loss was eligible to sue whereas an individual at loss could not. Particularly in commercial issues as stated in Scruttons and most notably the difficulties of The Eurymedon, whereby commercial transactions had to seek other forms of protection, such as statutory footing in order to avoid the unfavourable outcomes of privity. Furthermore, the great Injustice of privity was widely acknowledged. when a third party controlled his affairs, he did so on the basis that he will be exempt unless benefitting from the promise of the promisee, as noted in

This essay will explain the concepts of separate personality and limited liability and their significance in company law. The principle of separate personality is defined in the Companies Act 2006(CA) ; “subscribers to the memorandum, together with such other persons as may from time to time become members of the company are a body corporate by the name contained in memorandum.” This essentially means that a company is a separate legal personality to its members and therefore can itself be sued and enter into contracts. This theory was birthed into company law through the case of Salomon v Salomon and Co LTD 1872. This case involved a company entering liquidation and the unsecured creditors not being able to claim assets to compensate them. The issue in this case was whether Mr Salomon owed the money or the company did. In the end, the House of Lords held that the company was not an agent of Mr Salomon and so the debts were that of the company thus creating the “corporate Veil” .

There is also the concept of secondary liability. This means that if, for example, an employment agency

LIABILITY – There is no separation between the individual and the business. As the owner and operator of a sole proprietorship, all of the profit and loss is the personal responsibility of the business owner creating unlimited liability.

Courts use a legal fiction of treating corporations as artificial persons in order to allow the law to apply to corporations as a whole. This concept actually began with ancient Rome, where a business was considered to be a single, non-human body made up of many people. In the United States, being treated as an artificial person means that corporations have many of the same duties, responsibilities and protections as

This paper describes the impact of the decision made in the case of Tesco Stores Ltd v Brent LBC on the law and its effects on the corporate world, and the comparison between the doctrine of vicarious liability that it outlines and the doctrine of identification that was used earlier to determine the liability of corporations in cooperate crime.

corporate entity may be disregarded in those situations where the corporate form is being used to perpetrate injustice, defeat public convenience, or justify wrongful or inequitable conduct. '"

“Liabilities are debts: money you owe. Every business carries some liabilities—for example, ongoing payments to suppliers, rent for your office, compensation to employees, or fees for contractors” (Mancuso, 2014). Added liabilities may result if a business is ravaged by a fire or flood or if the business owner(s) become the victim of a lawsuit—for example, a patron, client or customer decides to sue your company after hurting themselves on company property. It is the intent of this paper to examine the role and responsibility of liability in different types of businesses from sole proprietorships to

Limited liability Company (LLC): Business’ owners are only subject to limited liability for company’s debts and actions. Owners will be only liable for their own mistakes or negligence that they may show in occasions.

The concept of a company being a separate legal entity is the most striking illustration in separating the company from its owners. A paramount principle of corporate law is that no shareholder or member of a company is made liable for the obligations incurred by such incorporations A company is different from its members in the eyes of law. In continuations to this the opposite also holds true in the sense that neither can the company be held liable for the acts of its members. It is a fundamental distinction that a company is distinct from its members.

There is no clear framework of the rules that would cover the contingencies of a ruling to pierce the corporate veil Idoport Pty Ltd v National Australia Bank Ltd. The corporate Veil usually protects owners and shareholders from being held liable for corporate duties. Yet again a decision made by the court to lift that veil and would place the liability on shareholders, owners, administrators, executives and officers of the company without ownership interest. The purpose of this essay is to conduct an analysis on the concept of lifting the corporate veil and to review the different views on its fairness and equitability to present a better understanding of the notion, the methods used was throughout researching the numerous scholars views on the subject, case law and statutes examples, and the evidence provided by the empirical study of Ramsay & Noakes. When we discuss the lifting the corporate veil the first case that pops out is the case of Salomon V A. Salomon & Co Ltd, since the decisions of applying the corporate veil were first formed as a consequence of this case. The idea covers all of company law and distinguishes that a company is a separate legal entity from its members and directors. Furthermore, spencer (2012); have indicated that one of the core principles that followed the decision in Salomon v Salomon was the wide acceptance one man company’s. However In order to form a

Limited liability – one of the most renowned pulling factors that influence business owners to incorporate their businesses is the limited liability that corporate status affords. Apparently, in the current dynamic and fast moving environment, the greatest fear of a partner or sole proprietor is the fact that their life’s savings can be jeopardized by sudden overwhelming debts or a law suit against their business (Griffin, 2011). As such, the protection that a C corporation offers to its shareholders and investors through limited liability or corporate veil comes across as one of its most treasured advantage. Perhaps this explains why most small scale business owners today are opting to incorporate their businesses rather than purchase expensive liability insurance.

(63)” Limited liability is another thing that is not inherently bad. If shareholders were completely held responsible for the debts of a corporation, then nobody would want to invest in any company. Limited liability helps boost the economy by encouraging people to invest money in companies which then make products for consumers to buy. Limited liability can also be used in a bad way such as when the owners of BP were not able to be held accountable for the environmental damage and the loss of 11 lives because they ignored safety regulations to make a bigger profit. The BP oil spill is another example of corporation privatizing profits and socializing cost. BP cut costs by getting around safety regulations on their oil rig. They Saved money and increased their profit by doing this but all of that profit stayed among the BP shareholders, however when the oil rig exploded the shareholders were not forced to pay for the damages and reparations. The public was forced to pay the cost of cleaning up the gulf. The shareholders made a profit by cutting corners, but when it finally caught up with them and disaster struck, they passed the cost of it on to everyone

The incorporated enterprises are recognized as legal persons who mean that these enterprises have a persona that is separate from that of its owners. Essentially, the personality of an incorporated company ensures that its liabilities do not extend to its owners unless in instances recognized by law. The rule on the legal personality of a company was laid in Salmon v. Salmon Co. Ltd , an English case in which the court held that the assets of a company are separate from those of the owner. To date, the rule has applied across the world and has been utterly beneficial in modeling the current business environment. However, some contentions have emerged with regards to companies that operate at an international level. Known as multinational

The decision of Salomon v. Salomon which brought about the doctrine of separate legal personality is one which has evolved over time. Over a century and still counting, the principle illustrated in Salomon, courts have are still reluctant in placing limitations on corporate personality and rejecting other approaches which pose as a greater challenge to the doctrine . From time immemorial, judicial history, lawyers and judges have reiterated that the doctrine of corporation is an intangible legal entity, without the body and soul. In Athanasian terms, the orthodox doctrine of corporation as a legal person, separate and distinct from the personality of the members who compose it, has been defined and propagated .