Introduction Salomon v Salomon & Co Ltd is a case focusing on a person called Salomon, who changed his business to a limited company. In order to meet the minimum requirements for a limited company, Salomon named his wife and five children as members. The company gave Salomon￡10,000 in debentures, ￡20,000 in shares and ￡9,000 cash to purchase his business. However, the company declared bankruptcy within the year of formation. The debentures held solely by Salomon could not be discharged because the company 's assets were insufficient to meet the outstanding amount. Thus, the unsecured creditors received nothing from the company. The aim of part (a) is to critique the decision made by the House of Lords in this case and to examine the reasons …show more content…
Salomon needed to pay for the debentures because they regarded Salomon Company as the agent of Salomon himself. The liquidator believed that the court would uphold the view that Salomon had committed fraud by deliberately utilising a device to avoid paying his creditors. The case was judged through three stages: Court of first instance (primary jurisdiction), Court of Appeal and the House of Lords, but received different decisions at each stage. In the Court of first instance, J. Vaughan Williams accepted the argument that Salomon Company is the agent of Salomon himself, and therefore he was responsible for the company debts of the unsecured creditors. The Court of Appeal concurred with the initial decision, but for different reasons, ascribing the company as 'virtually human '. However, it was acknowledged that Salomon effectively exerted full control as head of the company. Therefore, the company was a tool for Salomon to run his business with limited …show more content…
In other words, the investors invested according to their own judgement. Thus, they must take personal responsibility for their choice. In the transfer of the Salomon company, the contract is between the investors and the company, not the investors and Salomon himself. The judgment in the case of Continental Tyre & Rubber Co (Great Britain Ltd) v Daimler Co Ltd states that a company as a 'virtual person ' is an artificial construct for the sole purposes of the law, and the 'mind ' of the company therefore reflects the corporate mind of the members. Therefore , there was some insufficiency in the Companies law of 1862. Conclusion Salomon v Salomon & Co Ltd illustrates a typical case in company law. The opinion that a company has an independent personality has since been established. It was clearly pointed out the company needs to be responsible for all its acts and the assets of the company are separated from the members ' personal financial affairs. While the Companies Law of 1862 was updated, there is room for improvement in terms of the somewhat ill-defined requirements concerning members ' and shareholders ' interests and liabilities. This situation has led the Government to revise the law relating to companies
(Cheeseman2013) In the National Labor Relation Board v Shop Rite Foods case some employees of Shop Rite Foods of Texas elected a worker union as a Bargaining agent for a collective bargaining agreement for over 3 months the agreement was still not settled. Then ShopRite began to notice a lot of it merchandise being damaged in the warehouse. They determined that the damage was being intentionally being caused by dissident employees as a pressure tactic to secure concessions from the company in the collective bargaining negotiations.
When past services are rendered with a promise to pay, the court may enforce the promise to pay. However in Dementas’s case, the service was rendered after the promise to pay. The court found that Dementas’s services were rendered with no expectation of payment from Tallas. Moral obligation was created after some courts found the ruling to be too harsh. Even if moral obligation was applied to Dementas’s case, the court found that Dementas performed all services without expecting any payments in
Belanger v. Swift Transportation, Inc. is a case concerned with the qualified privilege of employers. In this case Belanger, a former employee of Swift Transportation, sued the company for libel in regard to posting the reason for his termination on a government data website accessible to other potential employers. Swift has a policy of automatic termination if a driver is in an accident, unless it can be proved that it was unpreventable. When Belanger rear ended another vehicle while driving for Swift the company determined the accident was preventable, while Belanger maintained it was not. Upon his termination Swift posted on a database website for promoting highway safety that he was fired because he “did not meet the company’s safety standards,”
This is a complex case, involving multiple parties and several variables that need to be examined thoroughly. The parties mentioned include Knarles operator of the facility maintenance company, his son Barkley, their employee, a licensed plumber, and Mr. Chetum. Although in the end Chetum is suing the facilities maintenance firm for a breach of contract, all factors must be examined to determine proper fault.
The case begins with an individual shareholder, Margarita Torres, who first purchased shares in 1997 and who is trying to evaluate the operational performance of the business in order to make a decision rather or not purchase more shares
This short paper is about the court decision between a financial advisor, a cohort of the financial advisor, and the investor. This decision deals with what is known as holder in due course or HDC. By being able to understand the court’s decision and how HDC works, we are able to decide whether or not it is fair. I am also able to give my thoughts on HDC, which are based both on this court’s decision and readings from the text.
In the case of Chelsea Industries, Inc. v Gaffney there was a name that goes by the name Lawrence Gaffney who was the president and general manager of Ideal Tape Company (Ideal). This company was engaged in the business of manufacturing pressure-sensitive tape while being a subsidiary of Chelsea Industries, Inc. (Chelsea). Gaffney along with three other ideal executives he recruited decide to open a competing manufacturing company using their positions at Ideal to gather ideas, get customers, and equipment while Chelsea had no idea of their intentions. Chelsea decided to sue them for the damages. I believe that Chelsea would win this case and also be awarded for the damages. Simply put, an officer of a corporation cannot and should not
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
Piercing the Corporate Veil Since the establishment in Salomon v Salomon, the separate legal personality has been long recognised in English law for centuries, that is to say, a limited liability company has its own legal identity distinct from its shareholders or directors. However, in certain circumstances the courts may be prepared to look behind the company at the actions of the directors and shareholders. This is known as "piercing the corporate veil". There are numerous cases concerning the "piercing the corporate veil", among which, Jones v Lipman[1] was a typical case. Lipman sold land to Jones by a written contract but refused to complete the sale because of another good deal, instead he offered damages for breach of contract.
The unfair prejudice petition has always been regarded as the easier and more flexible option for minority shareholders’ protection compared to the statutory derivative action. The restrictive leave requirements under the statutory derivative claim where the concept of prima facie, good faith and ratification have been interpreted within the confines of the origins in the case of Foss v Harbottle do not add any appeal the statutory derivative claim. Further, the approach in relation to granting indemnity costs orders which is rather limited does not in any way encourage any potential claimant to pursue a derivative action. Recent cases which allows corporate relief to be obtained via unfair prejudice petition and even the possibility if recovering costs under and unfair prejudice petition has further relegated the significance of the derivative action.
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
Jacob is disappointed and his situation has left him with a decision on what to do with the money. This case study will pinpoint Jacob’s ethical dilemma and what ethical action he should take. Also, the roles and responsibilities of an employee dealing with an ethical situation, as well as the ways of an organization to maintain ethical practices in the workplace, will be discussed. By doing so, Jacob will maintain his honesty and not let his personal interest be in the way resulting trust within the workplace will be maintained.
In Krell v. Henry {1903} a plea of frustration succeeded because the court held that the common purpose for which the contact was entered into, could no longer be carried out. But in the same year for similar set of facts, the Court of Appeal decided in Herne Bay v. Hutton [1903] that the contract had not been frustrated because the "common formation of the contract" had not changed. It clearly was a policy decision which shows the reluctance of the courts to provide an escape route for a party for whom the contract ha...
This particular statute allows for corporations and such to obtain several, but not all, constitutional rights as any person or persons. In particularly own property, sue and be sued under criminal and civil law, enter contests. Moreover, because corporations and such are considerate as “person”, business has the legal rights for its debts and damages. On the contrary, persons who are employed by a particular association are liable for their own misconduct and law-breaking while acting on behalf of a corporation. In addition, corporation has rights for its own actions, has rights such as: limited free speech and to advertise their product ("The Rights of Corporations," 2009). Likewise, businesses have the responsibility to elect a CEO, provide continuity; increase profits, social responsibilities, and manages recourses effectively (“Functions & Responsibilities of a Corporation").
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.