company a separate legal entity
Contents
Case Analysis
Salomon v. Salomon & Co.
1897
Human Beings are generally legal person but humanity is a state of nature and legal personality is an artificial construct, which may or may not be conferred. The origin of corporation lies in a logical extension of this separation of humanity from legal personality as the group of humans who are engaged in a common activity could attempt to simplify their joint activity by gaining legal personality from the venture.
Introduction:
Solomon was leather Merchant who converted his business into a Limited Company as Solomon & Co. limited i.e. Company. The company so formed consisted on Solomon, his wife and five of his children as members. The company purchased the business of Solomon for £39,000; the purchase consideration was paid in terms of £10,000 debentures conferring a charge over the company’s assets, £20,000 in fully paid, £1 share each and the balance in cash.
The company in less than one year ran into difficulties and liquidation proceeding commenced. The assets of the company were not even sufficient to discharge the debentures (held entirely by Solomon himself). And nothing was left for unsecured creditors. The liquidator on behalf of unsecured creditors alleged that the company was a sham and mere alias or agent for Salomon.
Judgment:
High Court
At first instance, the case entitled Broderip v SalomonVaughan Williams J said Mr Broderip 's claim was valid. It was undisputed that the 200 shares were fully paid up. He said the company had a right of indemnity against Mr Salomon. He said the signatories of the memorandum were mere dummies; the company was just Mr Salomon in another form, an alias, his agent. Therefore it was entitled to indemnity from the principal. The liquidator amended the counter claim, and an award was made for indemnity.
Court of Appeal
The British of Appeal considered the matter and Kay LJ stated that
“The statue was intended to allow seven
Case Analysis
Salomon v. Salomon & Co.
1897
Human Beings are generally legal person but humanity is a state of nature and legal personality is an artificial construct, which may or may not be conferred. The origin of corporation lies in a logical extension of this separation of humanity from legal personality as the group of humans who are engaged in a common activity could attempt to simplify their joint activity by gaining legal personality from the venture.
Introduction:
Solomon was leather Merchant who converted his business into a Limited Company as Solomon & Co. limited i.e. Company. The company so formed consisted on Solomon, his wife and five of his children as members. The company purchased the business of Solomon for £39,000; the purchase consideration was paid in terms of £10,000 debentures conferring a charge over the company’s assets, £20,000 in fully paid, £1 share each and the balance in cash.
The company in less than one year ran into difficulties and liquidation proceeding commenced. The assets of the company were not even sufficient to discharge the debentures (held entirely by Solomon himself). And nothing was left for unsecured creditors. The liquidator on behalf of unsecured creditors alleged that the company was a sham and mere alias or agent for Salomon.
Judgment:
High Court
At first instance, the case entitled Broderip v SalomonVaughan Williams J said Mr Broderip 's claim was valid. It was undisputed that the 200 shares were fully paid up. He said the company had a right of indemnity against Mr Salomon. He said the signatories of the memorandum were mere dummies; the company was just Mr Salomon in another form, an alias, his agent. Therefore it was entitled to indemnity from the principal. The liquidator amended the counter claim, and an award was made for indemnity.
Court of Appeal
The British of Appeal considered the matter and Kay LJ stated that
“The statue was intended to allow seven
Links: http://www.scribd.com/doc/104412675/The-principle-established-in-Salomon-v-Salomon-Ltd-1897-continues-to-underpin-company-law-however-the-courts-are-prepared-to-ignore-the-veil-of-in http://www.lawteacher.net/company-law/cases/ http://www.lawteacher.net/company-law/essays/salomon-v-salomon-co-foundation-company-law-essay.php http://www.powershow.com/view/12ac2e-OGYwZ/Salomons_Case_Salomon_v_Salomon_powerpoint_ppt_presentation http://thecypruslawyer.com/salomon-v-salomon-co-ltd http://en.wikipedia.org/wiki/Salomon_v_A_Salomon_%26_Co_Ltd http://en.wikipedia.org/wiki/Broderip_v_Salomon http://essayandreportwriting.com/academics/report-writing-samples/solomon-v-solomon-co-ltd-case-study-analysis/