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 .
This doctrine has been seen as a “two- edged sword,” reason being that at a general level while it was seen as a good decision in that by establishing that corporations are separate legal entities, Salomon 's case endowed the company with the entire requisite attributes with which to become the powerhouse of capitalism. At a particular level, however, it was a bad decision. By extending the benefits of incorporation to small private enterprises, Salomon 's case has promoted fraud and the evasion of legal obligations.
This paper seeks to address the effects and consequences of the separate legal personality via making references to English and Ghanaian courts which has equally developed a criterion for piercing the corporate veil.
A body corporate is a legal person
“The idea that a corporation is a legal person with constitutional rights is, of course, a controversial one. Some commentators argue that it's bad policy. In my view, however, it is a well-settled principle of US constitutional law and justifiably so. The legislative history of the Fourteenth Amendment suggests that Congress substituted the word ''person'' for the word ''citizen'' precisely so that the provisions so affected would protect not just natural persons but also legal persons, such as corporations, from oppressive legislation.”
The principle of the separate legal entity was established in the case of Salomon v A Salomon &Co Ltd. it is difficult to pierce the separate legal entity of the company as the House of Lords approach Companies Act in Salomon. However, it was the job of the courts to deviate from the legal fiction in the absence of any statutory regulations. Therefore, a good understanding of separate corporate personality is essential to understanding what company law is about.
He attacks Friedman selective choice of legal realities that help prove his stance and discarding of those that do otherwise as mere “legal fictions”. In that, Denning disputes that Friedman rests his arguments on legal realities such as the law of agency, and dismisses another legal reality – the corporation – for the sake of illustrating how the corporation’s money belongs to its stockholders, customers, and employees but not the real legal owner – the organisation itself. Instead of providing a balanced argument on the legal definitions of terms “corporations” and “agency”, Denning’s stance is mainly concerned with how Friedman conveniently chooses legal facts that only provide backing to his conclusions, instead of tackling these core terms to help support his own argument.
Chapter 2: A synopsis of the corporate veil principle in Salomon v Salomon, and its development.
“Corporations are said to be “creatures of statute;” they exist because state laws allow human beings to organize themselves into entities that separate ownership and management functions as the outline above delineates. The business rule is there a presumption that making a business decision, the offices act in good faith with the belief that their actions is what is best for the company (Halbert/Ingulli, 2012 pg. 31).”
Ever since the outset of the industrial revolution, corporations have been an inherent constituent in American society. However, due to this heavy influence, corporations have ever since created a struggle with individuals for social, political, and economic power. At present, this issue is only being addressed at the economic level. Presidential candidates such as Donald Trump and Hillary Clinton are putting a considerable amount of attention towards corporate taxes but are neglecting the legal aspects of corporate personhood. The main issue besetting the United States as a whole, is legal reform among corporations because it is affecting the political values, freedoms, and security of the American people.
|Readings |Read Ch. 1, 2, 3, 4, & 25 of The Legal Environment of Business. | | |
Jan Schlichtmann is an attorney in Boston, the beginning of this venture is when Jan is shown to be on the air in a radio station. A woman by the name of Anne Anderson introduces herself to Jan in a particular way “How come you never call me” Anne said, “‘Believe me if I had your number I would” Jan said, “But you do have my number“Anne said.[1] This moment leads Jan to hear that Anne has her case that his firm is managing but has not received a return call in weeks. Her case is that her son has died of leukemia two years prior. After being on the spot this makes Jan look at the case personally, but is reluctant. Jan is unsure that this case will show any development where his firm may earn a profit, still heads for Woburn, Massachusetts.
The legal issue surrounding the plaintiffs’ Janvier et al. deals with negligence in the workplace resulting in harm. Negligence is a form of tort law. The purpose of tort law is to compensate victims. Typically in order to claim negligence, the plaintiff must prove four things: duty of care, standard of care, that the plaintiff suffered injury or damage, and the defendants conduct caused injury to the plaintiff. Despite this claim of negligence, according to WCB legislation, the lawsuit filed by these plaintiffs is not actionable in court. As an employer worker relationship exists, the plaintiffs are not allowed to bring legal action upon their employer for damages. The WCB legislation prevents workers from suing their employers. In
On January 2010, The Supreme Court backed the right of corporations such as Walmart, Target, and KMart to spend their money on political campaigns. The Supreme Court's Ruling was that this action is supported by the corporations first amendment rights. This decision superseded prior understanding of the subject.
Since its creation in 2010, Salvos Law has conducted over 11,000 pro bono cases in Australia. Salvos Law is a firm under the ABS structure and is apart of Salvation Army and is comprised of a commercial law firm and a pro bono firm. The number of pro bono case taken on by Salvos Law is significantly greater than the amount of pro bono cases conducted by most firms in Canada and it’s success is attributed to its ability of Salvation Army to have unlimited ownership of the law firm. In British Colombia, Pivot legal tried to copy the Salvos’ framework, but ultimately had to close down due to lack of affordable capital and lack of business management expertise; both that could have been mitigated if it were conducted with an ABS model .
The Corporate personhood, a universal legal model, grants corporations genuine rights and responsibilities similar to those of individual citizens. This concept proved useful in American jurisprudence in that it simplified one’s interactions with huge conglomerates. Citing the Fourteenth Amendment of the constitution, the term corporate personhood served to consider corporations similar to individuals. In that vane, corporate entities like individuals could join contracts as a single unit, corporate entities like individuals could be named in civil lawsuits as a single group and corporate entities like individuals could make decisions that would hold the enterprise responsible as a single entity even though the decisions were
The so called theory of Alter Ego holds the judicial person liable per se and differs from the previous model as it does not touch upon vicarious liability of natural persons and their culpability; it simply constructs independent criminal liability of corporations, which allows criminal law to preserve its strong core in cases where the provision on the prohibited act has a vague or is leaking the guilt requisite. In difference from vicarious liability, the theory of Alter Ego is broader and deeper as it establishes corporate intent and involves a penalty for corporations that have commenced intentional offences. Moreover, natural persons are considered as organs of the corporate body in the sense that they are the limbs and brains of the
This essay will mainly analyze and discuss some relevant legal principles and terms related to the judicial observation on legal position that the judge made in the Australian Competition and Consumer Commission v Yazaki Corporation case. Therefore, it is necessary to cover the following key issues: 1. Definition and explanations of separate legal entity doctrine and corporate groups. 2. When will a subsidiary company be recognized as an agent of its parent. 3. Under what circumstances can corporate veil be ignored or lifted.
The primary doctrine of corporate personhood was introduced in 1886 in the case of Santa Clara v. Southern Pacific Railroad. This case, brought to the Supreme Court, involved the challenging of a California railroad tax, contingent on an insistence of the Fourteenth Amendment and the equal rights protection it includes. Corporate personhood applies to the ability of organizations to be distinguished, by law, as an individual which includes the particular protections, abilities and rights that all individuals are entitled to. The most useful rights these organizations benefit from are the capacity to sue or to be sued in a court of law and to be able to enter into agreements contractually. In other words, the individuals working for the