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Essay / Research Paper Abstract
This 5 page paper considers the argument that corporate personality is nothing more than a fluid concept that allows the courts to choose when to impose liability for corporate wrongdoing. The paper looks at English law and cites numerous cases. The bibliography cites 5 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEcorppr.rtf
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Unformatted sample text from the term paper:
law flows from this basic assumption, however there are also cases where the legal personality may be set aside by the courts when there has been wrong doing. As a
result of these exceptions it may be argued that corporate personality nothing more than a fluid concept that allows the courts to choose when to impose liability for corporate wrongdoing.
It is certain that the role of corporate personality can be seen as aiding commercial expediency. The main case that establishes this is that of Salomon v Solomon and
Co [1897] A.C. 22, H.L (Davies, 2001). It was in this that the full realisation of what the concept of corporate personality actually meant. This case is worth consideration; here
there was a leather merchant who ran a successful business. In 1892 the businesses was converted into a limited company; Salomon & Co. Ltd, which bought the business from Mr
Solomon for a total of ?30,000 (Davies, 2001). It was found that this figure was not based on a true market value, but was a representation of what he hoped
for as the business owner. The subsequent purchase was funded with ?10,00 in debentures and cash. Salomon owned 20,001 of the 20,007 issued shares, the remained were held by family
(Davies, 2001). When the company failed and only the debentures were met form the assets the unsecured creditors were not happy. The court of appeal found that the company fa?ade
was a sham and did not abide with the meaning of the Companies Act of the time. This implication here was that the company was an agent of the shareholders,
and as such, Salomon was personally libel for the debts (Davies, 2001). However, this was overturned by the House of Lords, as there it was seen that there was a
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