Solomon Case Study

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Recommended: Comparative study of separate legal personality

Separate Legal Personality, Limited Liability and the Corporate Veil
Dignam and Lowry (2016) state that in order to understand the legal personality we need to keep the human being and legal persons separate as humanity is a state of nature while the legal personality is an artificial creation. They further state that legal personality can be given to non humans since humanity is not a requisite for legal personality. Kraakman, Armour, Hansmann state that corporate law allows a company to serve as a single contracting entity different from its owners and managers i.e. the company can own property, enter into contracts, sue and be sued in its own name. Davies and Worthington (2012) sum up by saying that the company is a distinct legal entity …show more content…

Liability of parent companies for the activities of their subsidiaries
Brenda Hannigan (2009) states that in legitimizing the concept of one man Company the Solomon case also legitimizes the group concept i.e. the subsidiary company is not an agent of its parent company and both are separate legal entities and the relationship existing between them is same as the one between Solomon and his company. It is expected for the courts to respect the separate identity of each company in the group by applying the principles of the Solomon case.
David Kershaw (2012) states that a corporate group consisting of parent and subsidiary companies such as Vodafone Plc and Mark and Spencer Plc are often thought of as single unit when in fact they are distinct legal units under law. He states despite the Solomon verdict not saying anything about being limited to companies owned by real persons it is assumed there needs to be no further discussion in with regard to corporate groups. He asks the question that under what circumstances if at all any, is the distinct legal personality of parent and subsidiary companies ignored and they are treated as a single economic …show more content…

Cape Products was a wholly owned subsidiary of Cape Plc and was engaged in the business of manufacturing incombustible asbestos. David Chandler was an employee of Cape Products between 1959 and 1962. In 2007 he discovered that he had contracted asbestosis as a result of exposure to asbestos dust. By that time Cape Products no longer existed and had had no policy of insurance that would indemnify it against claims for asbestosis. David Chandler brought proceedings against Cape Plc for negligence alleging that it owed and had breached a duty of care towards

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