The Case Of Salomin V. Salomon & Co.

A corporation under Company law or corporate law is specifically referred to as a "legal person"- as a subject of rights and duties that is capable of owning real property, entering into contracts, and having the ability to sue and be sued in its own name. In other words, a corporation is an artificial person that in most instances is legally treated as a person, and empowered with the attributes to own its own property, execute contracts, as well as ability to sue and be sued. One of the main motivations for forming a corporation or company is the limited liability it offers its shareholders. By this doctrine (limited liability), a shareholder can only lose only what he or she has contributed as shares to the corporate entity and nothing more. The case of Salomon V. Salomon & Co., commonly referred to as the Salomon case, is both the foundational case and precedence for the doctrine of corporate

Nor are the [shareholders], as members, liable in any shape or form, except to the extent and in the manner provided for by the Act."

In summary, the rule in the Salmon case that upon incorporation, a company is generally considered to be a new legal entity separate from its shareholders has currently continued to be the law in courts or common law jurisdictions. The case is of particular significance in company law, firstly; it establishes the canon that when a company acts, it does so in its own name and right and not merely an agent of its owner, secondly; it establishes the important doctrine that shareholders under common law are not liable for the company’s debts beyond their initial capital