2: Legal personality

Question 1

Salomon v. Salomon (1897)

Effects of incorporation, separate legal personality

Answer 1

• Salomon, who manufactured boots, had formed its business into a company.
• he held 20,000 shares and six family members held one each.
• advanced a loan secured on the assets of the company, then encountered financial difficulties.
• Held that he took preference over ordinary creditors. The law treated him as a separate person from the company, even though he dominated it.

Question 2

Bolton v. Stone (1951)

Unicorporated associations, Rights of members

Answer 2

the claimant, Miss Stone, brought her action against Bolton, the Secretary, and three other members of a cricket club, which was unincorporated.

Question 3

What does Ultra Vires mean?

Answer 3

‘beyond the powers’

for example a corporations are established for particular purposes. It must not engage in activities which are outside of this purpose.

Question 4

What are natural persons?

Answer 4

All human beings.

Begins at birth, ends at death.

Question 5

What are juristic persons?

Answer 5

Non-human legal entities.

Sometimes known as artificial legal persons.

Question 6

What are corporations sole?

Answer 6

Legal persons representing an official position which will be occupied by a series of different people.
E.g. The Queen.