The Doctrine Of Commercial V. A Salomon Co. Ltd

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Introduction: Salomon v A Salomon Co. Ltd is a historical UK Company Law case which led to the establishment of The doctrine of separate legal entity (Macintyre 2012). This case is often cited in journals and textbooks and the principles are often observed in English Law Firms (Karasz 2012). The case describes the limited company that was founded by Mr. Aron Salomon, a leather shoemaker at London, Whitechapel road. The company had seven members formed by Salomon with major shares and his family members who subscribed as shareholders to fulfill the principal of a corporation as set out in The Companies Act, 1862. Hence, Salomon was a chief creditor and as well as a shareholder of his company. Salomon’s company failed due to a series of strikes and the interests were insufficient to be paid to the creditors. The company became insolvent and a fixed charge was put towards the debentures over the company. The liquidator sued and claimed to high court for cancellation of Salomon’s indemnity. This study further describes the facts, principles, decisions of High Court and the overturning of the decision of House of Lords for Salomon’s case and the rise of the principle of separate entity. For the given case Lord Halsbury stated “Either the limited company was a legal entity or it was not. If it was, the business belonged to it and not to Mr. C Salomon. If it was not, there was no person and nothing to be an agent at all; and it is impossible to say at the same time that there is

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