Business Law
Business Law
“The doctrine laid down in Salomon v Salomon & Co Ltd [1897] AC 22 has to be watched very carefully. It has often been supposed to cast a veil on the personality of a limited company through which the courts cannot see. But that is not true. The courts can, and often do, draw aside the veil. They can, and often do, pull off the mark. They look to see what really lies behind” - Lord Denning in Littlewoods Mail Order Stores v Inland revenue Commissioners [1969] 3 All ER 422.
Introduction
“Law is order, and good law is good order” - Aristotle 343 BC
Incorporation is the act of a business achieving a separate corporate personality from that of its owners. When a company is a separate legal identity to its owners it is said to be ‘incorporated’
The essay will discuss the problems that may arise with cases related to the business’ corporate personality and how its not always the most simple of cases when trying to follow the doctrine laid down in Salomon v Salomon & Co Ltd [1897] AC 22. This is a case which set a precedent for the concept of corporate personality and highlights the issues that are faced during the trial of such cases. In contrast to this case is another well known case, Littlewoods Mail Order Stores v Inland Revenue Commissioners [1969] 3 All ER 422. This case shows the contradictory outcomes that can occur when the courts, ‘draw aside the veil’ , which is a matter of importance mentioned by Lord Denning. The case represented the value of distinguishing ownership so as to ascertain culpability.
The essay will cover the cases mentioned, as well as citing other cases which have been effected by the doctrine. It will highlight the importance of incorporation and corporate personality of companies by explaining the issues that have arisen for the legal authorities involved in the cases and take a more in depth look at two of the more well known ones. This will give a full and valuable insight into a specific area of business
“The doctrine laid down in Salomon v Salomon & Co Ltd [1897] AC 22 has to be watched very carefully. It has often been supposed to cast a veil on the personality of a limited company through which the courts cannot see. But that is not true. The courts can, and often do, draw aside the veil. They can, and often do, pull off the mark. They look to see what really lies behind” - Lord Denning in Littlewoods Mail Order Stores v Inland revenue Commissioners [1969] 3 All ER 422.
Introduction
“Law is order, and good law is good order” - Aristotle 343 BC
Incorporation is the act of a business achieving a separate corporate personality from that of its owners. When a company is a separate legal identity to its owners it is said to be ‘incorporated’
The essay will discuss the problems that may arise with cases related to the business’ corporate personality and how its not always the most simple of cases when trying to follow the doctrine laid down in Salomon v Salomon & Co Ltd [1897] AC 22. This is a case which set a precedent for the concept of corporate personality and highlights the issues that are faced during the trial of such cases. In contrast to this case is another well known case, Littlewoods Mail Order Stores v Inland Revenue Commissioners [1969] 3 All ER 422. This case shows the contradictory outcomes that can occur when the courts, ‘draw aside the veil’ , which is a matter of importance mentioned by Lord Denning. The case represented the value of distinguishing ownership so as to ascertain culpability.
The essay will cover the cases mentioned, as well as citing other cases which have been effected by the doctrine. It will highlight the importance of incorporation and corporate personality of companies by explaining the issues that have arisen for the legal authorities involved in the cases and take a more in depth look at two of the more well known ones. This will give a full and valuable insight into a specific area of business
Bibliography: GOULDING, S., 1999, Company Law, 2nd ed. London: Cavendish Publishing Ltd MARSH, SOULSBY, 2002, Business Law, 8th ed. Cheltenham: Nelson Thornes Ltd RUSH, J., OTTLEY, M., 2006, Business Law. London: Thompson Learning TWEEDALE, G., FLYNN, L., 2007, Cape Industries, and Multinational Corporate Liability for a Toxic Hazard, 1950-2004, Piercing the Veil, 268 HICKS, A., GOO, S, H., 2008, Cases and Materials on Company Law, 6th ed. London: Oxford University Press OWENS, K., 2001, Law for Non-Law Students, 3rd ed. London: Cavendish Publishing Ltd