Iscuss the rationale and impact of the decision on company law

Company Law for Business
Summative Assignment

The rule in Salomon v Salomon & Co [1897] AC 22 has been described as one of the corner stones of English Company Law.

Discuss the rationale and impact of the decision on company law.

Your assignment should be appropriately referenced and should contain a full bibliography of all sources consulted in undertaking the work. You should also be aware of the University rules concerning unfair practice.

a?cite using OSCOLA, the Oxford Standard for Citation of Legal Authorities, fourth edition.

Iscuss the rationale and impact of the decision on company law

SXL2127/3127 Company Law for Business
Summative Assignment 2014/2015

The rule in Salomon v Salomon & Co [1897] AC 22 has been described as one of the corner stones of English Company Law.

Discuss the rationale and impact of the decision on company law.

Submission date: 17 November 2014

Your assignment should be appropriately referenced and should contain a full bibliography of all sources consulted in undertaking the work. You should also be aware of the University rules concerning unfair practice.

The following pages will show you how to:

cite cases and legislation, i.e. the a?primarya sources of law, in the accepted way
refer to a?secondarya sources such as books, journals and government reports in your work
cite using OSCOLA, the Oxford Standard for Citation of Legal Authorities, fourth edition.
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This resource was devised by Cathie Jackson and Ian Bradley, Information Services staff at Cardiff University and was partly funded by the UK Centre for Legal Education. The 4th edition revisions have been added by Matthew Davies and Lynn Goodhew. OSCOLA is produced by the Oxford University Law Faculty and further details in the use of the OSCOLA style can be found on the OSCOLA website.

Iscuss the rationale and impact of the decision on company law.

Salomon v Salomon & Co Ltd [1897] AC 22
Mr Aron Salomon initially carried on a boot and leather business as a sole trader. He later sold the business to a company he formed, Salomon & Co. Ltd
The boots and leather business was valued at A?39,000 when sold to the Salomon & Co. Ltd.
This was paid for by
A?10,000 worth of debentures (making him a secured creditor for A?10,000)
Mr Salomon later received an advance of A?5,000 from an Edmund Broderip.
A?20,000 in A?1 shares
and A?9,000 cash.
Difference between debentures and shares?
(Debenture holder is a creditor of the company/ while a shareholder is the owner of the company)

Thus Mr Salomon held 20,001 shares in the company Salomon & Co. Ltd, and because the legal minimum number of shareholders in a company at the time was 7, each six member of Aron Salomonas family (Mrs Salomon and 5 of his children) were allotted one share each in the company.
Soon after the formation the company went into liquidation and only A?7,000 was available to pay the creditors.
Mr Salomon claimed this amount was due to him by virtue of his debentures, other unsecured creditors resisted this claim on the ground that Mr Salomon was the same as Salomon & Co Ltd and he could not owe himself money.
The creditors argued that Mr Salomon should be personally liable for the debts of the company and that the company was fraudulent and a mere a?alter egoa of Mr Salomon.

First Instance Court : Broderip v Salomon [1895] 2 Ch 323 329

Vaughan Williams J. accepted the argument of the creditors and held that the company was an agent of Salomon, therefore he was liable for debts to unsecured creditors.
Court of Appeal
It was held that the company was a myth and a fiction and that the incorporation of the business by Mr. Salomon had been a mere scheme to enable him to carry on as before but with limited liability.
According to Lord Halsbury, It was
Either the company was a legal entity or it was not. If it was, the business belonged to it and not to Mr. Salomon. If it was not, there was no person and nothing to be an agent at all.”

House of Lords Salomon v Salomon & Co Ltd [1897] AC 22
The House of Lords upon critical interpretation of the 1862 Companies Act, quashed the ruling of the Court of Appealas.
(The 1862 Act created limited liability companies as legal persons separate and distinct from the shareholders).
The court It held that the company was duly constituted in law and it was not the function of judges to read into the statute limitations they themselves considered fair.

Referencing Requirements:
The rule in Salomon v Salomon & Co [1897] AC 22 has been described as one of the corner stones of English Company Law.

Discuss the rationale and impact of the decision on company law

Your assignment should be appropriately referenced and should contain a full bibliography of all sources consulted in undertaking the work.

Bibliography.

Core Text Book.
Griffiths, A (Compilation) (2013) Company Law, Pearson.

This book has been compiled from various texts in order to provide you with one source that covers the all the course namely Partnership Law and Company Law. This is not to suggest that other texts should not also be purchased because some have particular advantages.

Students are recommended to use EITHER:

a? N. Bourne, Bourne on Company Law, 6th ed., Routledge, 2013

a? Dignam, & Lowry, Company Law, Oxford Core Text, 2009

a? Davies, Gower & Davies Principles of modern company law, 8th edn, Sweet & Maxwell, 2012

a? Dignam, & Lowry, Company Law, Oxford, 2010

a? Dine, & Koutsias, Company law, Palgrave, 7th ed., 2009

a? French, Mayson & Ryan, Company Law, Oxford, 2010

a? Girvin, et al, Charlesworths Company law, Sweet & Maxwell, 2010

a? Hannigan, Company Law, Oxford, 2009

a? Hudson, Understanding Company Law, Routledge, 2012

a? Lowry and Reisberg: Pettetas Company Law: Company Law & Corporate Finance , 4th edn, Pearson, 2012

a? Kershaw, Company Law in Context, Oxford, 2011

a? McLaughlin, Unlocking Company Law, Hodder Education, 2009

a? Pettet, Company & Capital Markets Law, Pearson, 2012,

a? Wild and Weinsten, Smith and Keenanas Company Law, Pearson, 2011

Corporate Governance Texts (Basic)

a? Mallin, Corporate Governance, Oxford University Press, 2007

a? Tricker, Corporate Governance, Oxford, 2012

Partnership
Morse, G, Partnership Law (7th. Revised edn, 2010, Oxford University Press)

Case books
a? Hicks, A & Goo, S.H. (2008) Cases and Materials on Company Law (6th ed.,Oxford University Press)

a? L.S. Sealy (2010) Cases and Materials on Company Law (8th ed.,) Oxford University Press)

Statute Books
a? Griffiths. (2013/2014) Statutes On Company Law, Pearson.
a? Blackstoneas Statutes, Company Law 2013/2014
a? Moore, Company Law Statutes 2013-2014

Iscuss the rationale and impact of the decision on company law.

SXL2127/3127 Company Law for Business
Summative Assignment 2014/2015

The rule in Salomon v Salomon & Co [1897] AC 22 has been described as one of the corner stones of English Company Law.

Discuss the rationale and impact of the decision on company law.

Please ensure that you submit your assignments electronically through the Turnitin software on Blackboard and a paper copy to the College Administrative reception a?assignment collection boxa by 4pm on the stipulated submission date. Your assignment should be appropriately referenced and should contain a full bibliography of all sources consulted in undertaking the work. You should also be aware of the University rules concerning unfair practice. For further details please consult the School of Law Student Handbook.