The Case Of Littlewoods Mail Order Law Company Business Partnership Essay

Published Date: 02 Nov 2017

Incorporation is the procedure to create new or existing company registers as a limited company. Upon incorporation, a company convert a separate legal entity, diverse from its members. By Company Act 2006, a registered of company is definite to be a body corporate. On the registration of a company, the register must provide a certificate that the business is incorporated and so has what is known as legal personality. (French, D., Mayson, S. W., &Ryan, C. - 2012). Consequently, it gains right, obligation and duties, which are dissimilar and distinct from those of its members. All belong to the company and not the memberships like assets, debts and duty. Members are not liable of the company debts. A company can sue or be sued for legal wrong and the names of managerial members need not be impeded anafertoun). The most famous case that illustrate the process of the concept of registered company having a corporate personality in Salomon v Salomon & company (1897) (+50words)

Mr Salomon was a manufacturer of leather boots as a sole trader. He decides to transfer the business to a newly incorporated company. The other members of the company were his wife and his five children. He set up a company with 20007 shares, of which he held 20001 shares. These six individuals were the subscribers of the company’s memorandum and took one £1 share each. Payment to Salomon for the business was through issuing him a further 20000 at £1 shares and £10000 in debentures issued by the company and secured by a floating charge against the company’s assets. Thus, Salomon made a secured creditor. Unfortunately the company’s failed and the company went into liquidation. The company did not have enough assets to meet the creditors demand, the creditors sued Salomon persona to recover the money. (http://www.ulii.org/ug/judgment/commercial-court/2012/68 ) (250 Words)

The effects that have in the case of Salomon firstly is Company’s business is its business. (150 words)

Littlewoods Mail order Ltd v Inland Revenue Commissioners the courts look behind the veil to reveal the true facts. Littlewoods carry on a big business and had spent money a acquiring a fixed asset for a wholly owned subsidiary,, Littlewoods has spent money acquiring a fixed assets for wholly owned subsidiary. It claimed that this was a revenue expenditure for the use of the property a wholly owned by another rather than capital to ne employed in its trade, but he Court reject the claim....... (Dignam, A. J., Goo, S. H., & Hicks, A. - 2011).  140 p(150words)

In the Salomon’s cases and courts lift the veil to expose the true character and nature of the corporate.

The lift or pierce corporate veil means to close the eyes in corporate personality of an incorporate company with a view to ascertaining the members hiding behind the facade. When facade is used as disguise by the human, being who endeavour to cover their identity after perpetrating some wrong or fraud in the excuse of the company.( http://www.law-essays-uk.com)

Court referred the separate legal personality as the "Veil of incorporation". The effect of this Principle is that there is a fictional veil between the company and its members. have decide that the separation of the personality of the company and the member is not to be maintained. Therefore, the company is distinct from its members. Court will pierce the corporate veil or overlook the corporate veil to reach the person behindhand the veil or to expose the true from and characters of the concerned company.

The Comapny Act permit the lifting the veil and allows claims to be made against specifies corporate participants for the debts and obligations of the company. (http://www.acra.gov.sg/NR/rdonlyres/EA3B81CA-B14B-4B1F-A8FD-00A9609DD5CD/0/LegalNatureofCompanies.pdf)

In Salomon’s principle, the courts have almost been ready to pierce the corporate veil, rather than allowing the fraud to exist. (LAW ESSAY)

The most important circumstance where the corporate might be and has been lifted is when the company was set up for the purpose of committing fraud. In Gilford Motor Company Ltd v Horne, the claimant employed Mr.Horne had contract that he could not solicit the customers of the company. When he was leaving in the company, he formed a company in his wife’s name and solicited the customers of the company. In this case and Trustor AB v Smallbone it was clear that the main function of incorporation was to commit fraud.(WEB LAW ESSAY) Also, when sham group of company, that mean lifted the veil where the parent company and a subsidiary are treat as one body if they carry on the same business. Adams v Cape plc where the English parents of American subsidiary company was sued for asbestos contamination on America. Furthermore where the company abuse of legal procedure (Re Bugle Press), evasion of legal obligations, group of companies filling one account, Plc having one member or no trading certificate and a few other situations

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Conclusion (100 words )