Salomon Casestudy

Powerful Essays
Topics: Corporation
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Salomon v A Salomon & Co Ltd
From Wikipedia, the free encyclopedia Salomon v A Salomon & Co Ltd | Whitechapel High Street | Court | House of Lords | Citation(s) | [1897] AC 22 | Case history | Prior action(s) | Broderip v Salomon [1895] 2 Ch. 323 | Case opinions | Lord Macnaghten, Lord Halsbury and Lord Herschell | Keywords | Corporation, separate legal personality, agency |
Salomon v A Salomon & Co Ltd [1897] AC 22 is a landmark UK company law case. The effect of the Lords' unanimous ruling was to uphold firmly the doctrine of corporate personality, as set out in the Companies Act 1862, so that creditors of an insolvent company could not sue the company's shareholders to pay up outstanding debts. Contents [hide] * 1 Facts * 2 Judgment * 2.1 High Court * 2.2 Court of Appeal * 2.3 House of Lords * 3 Significance * 4 See also * 5 Notes * 6 References |
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Facts [edit]
Mr Aron Salomon made leather boots and shoes in a large Whitechapel High Street establishment. He ran his business for 30 years and "he might fairly have counted upon retiring with at least £10,000 in his pocket." His sons wanted to become business partners, so he turned the business into a limited company. His wife and five eldest children became subscribers and two eldest sons also directors. Mr Salomon took 20,001 of the company's 20,006 shares. The price fixed by the contract for the sale of the business to the company was £39,000. According to the court, this was "extravagant" and not "anything that can be called a business like or reasonable estimate of value." Transfer of the business took place on June 1, 1892. The purchase money the company paid to Mr Salomon for the business was £20,000. The company also gave Mr Salomon £10,000 in debentures (i.e., Salomon gave the company a £10,000 loan, secured by a charge over the assets of

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