Beruflich Dokumente
Kultur Dokumente
Quite rightly, it is
lifted by the judiciary at every oppurtunity and certainly
whenever justice demands it. Discuss.
Fuller once said, the trouble with the law does not lie in its
use of concepts, nor the use of 'lump concepts', the difficulty
lies in part... in the fact that we have often forgotten that the
'lumps' are the creation of our own minds.' Pioneering the
area of separate legal personality, the orthodox case of
Salomon v Salomon exists both as a powerful metaphor and
a judicial reality. It should be understood that the 'company
is at law a different person' as per Lord Macnaghten words
culminating to the ratio of Salomon.
In Salomon, we see an evident use of the metaphor to vividly
express the fact that Salomon's incorporation was legitimate
according to legislation and therefore he should be allowed
to benefit from limited liability.In this case Mr Salomon a
shoe manufacturer had sold his business to a limited liability
company where he and his wife and five children where the
shareholders and directors of the company (to comply with
the Companies Act of 1862 which required a minimum of 7
members). Vaughan Williams J in the High Court accepted
the argument that since Mr. Salomon had created the
company solely to transfer his business to it, at prima facie,
the company and Salomon were a singular unit; the
company was in reality his agent and he as principal was
liable for debts to unsecured creditors. The COA was no
different and also ruled against Mr.Salomon, reading that the
shareholders were "mere puppets" in this showcase and he
was the brains of the company. The lord justices in multiple
occassions described the company as a myth and a fiction
and said that the incorporation of the business by Mr.
Salomon had been a scheme to enable him to carry on as