Salomon v Salomon was and still is a landmark case.
The specific advantages to be analyzed are those arising out of a company being accorded the status of a corporate legal person and the limited liability status.
A company is defined as an entity formed by a group of persons who are desirous of engaging in some trade. It is formed with an objective of limiting personal liability to the founders or shareholders in case of any externalities.
The company thereby formed exists as a legal entity that has its own name and exists as legal person. It does business independently of the persons who founded it or who hold any stakes in it.
In any form of business, there is always analysis as to which form of enterprise to constitute. Others may prefer sole proprietorship, partnerships, or companies.
Under companies, there are limited liability ones. Majority of company establishments are of course the limited liability. This means that incase of financial constraints in the company, what is at stake is the amount of investment made to the company and not the personal property of the shareholders.
The liability is only restricted to what the members have contributed to the company in capital or shares held. This is one of the reasons for the popularity of the limited liability companies. Aron Salomon, had established a business enterprise for the manufacture of leather shoes and boots.
His family members showed their interest in the business and he thereby converted it into a limited liability company. He held a vast majority of the shares while the rest of the six members only held one share each.
The price at which he sold the business to the company is termed as too extravagant. It was deemed as an unfair selling price. He then lent some money to the company to help enhance its operations through a more robust financial base.
Ltd since their supplies were curtailed. Their stores therefore remained full of unsold stock.
Salomon assigned to their creditor his debentures and interest secured by a floating charge. Broderip sued to enforce his security.
Broderip was repaid his money and the debentures were reassigned to Salomon who retained the floating charge over the company. The liquidator met Mr. He claimed that the debentures were issued for fraud.
It was however ruled in favor of the creditor by the court of appeal. The decision was however overturned by the House of Lords who held that, once the entity was formed into a limited liability company, it acquired new status of being a distinct legal entity different from the shareholders who formed it.
There cannot be a way by which any of such persons can be an agent for the other. The claims that Salomon acted as an agent of the company were therefore dismissed.
That his actions constituted fraud, no evidence was adduced to support such an allegation. The creditors ought to know when they decide to deal with a company, of the legal effects of their engagement. Salomon could therefore not be held liable for any wrongs whether to repay any money owed to creditors since he is a different person from the company although he owns a majority of the shares.
The company to meet its liabilities and the shareholders theirs. What remains at stake is only the amount held in shares. From the above case, the advantages of corporate personality and limited liability are thereby contained. They are discussed as follows; once a company has achieved its registration, it becomes an artificial legal person.
This means that it can sue on its own name and likewise be sued. The effect of this is that, shareholders are protected from civil suits resulting from the acts or omissions of their company. They cannot be dragged into cases of the company just because they are the shareholders.Read this essay on Salomon V.
Salomon Case. Come browse our large digital warehouse of free sample essays. Get the knowledge you need in order to pass your classes and more. Only at lausannecongress2018.com". salomon v salomon.
examine the legal standing of the doctrine of 'separate legal personality' as it was developed in Salomon v. Salomon & Co Ltd  AC Even though this doctrine is the stone head of the English company common law, the courts introduced several .
Custom Salomon v Salomon and Co. Ltd Essay In this paper, an analysis on the advantages of forming a company is made with reference to the case of Salomon v Salomon & Co.
Ltd. The specific advantages to be analyzed are those arising out of a company being accorded the status of a corporate legal person and the limited liability .
Salomon v A Salomon and Co Ltd  AC 22 Case Summary. The requirements of correctly constituting a limited company. Introduction. Separate Legal Personality (SLP) is the basic tenet on which company law is premised.
Establishing the foundation of how a company exists and functions, it is perceived as, perhaps, the most profound and . The Principle of Salomon lausannecongress2018.comn v Salomon & Co Ltd  AC 22 (lawcite link) was the case that got me interested in corporate law.
The principle from the case is very simple - a company is a separate legal entity and thus a juristic "person" in the eyes of the law.
Review the Rule Laid Down in the Case of Salomon V Salomon () Essay “Review the rule laid down in the case of Salomon v Salomon (). Identify the issues that have arisen after that decision and outline how the rule has been applied in recent cases.