Concepts of agency and the corporation
The case of Salomon v Salomon & Co Ltd (1896), Concepts of agency and the corporation
- Critically analyze the concepts of agency, and the corporation with specific reference to limited liability and legal personality.
- Please examine the case of Salomon v Salomon & Co Ltd [1896] in respect of limited liability and the corporation. Comment on this case and the main
rationale for the decision reached in this leading case. The agency is a problem connected to the case. Essentially, under an agency agreement the agent has
to carry out activities and represent the interests of the principal. This concept applied to a corporate context means that the directors (agents) must act in
the best interest of the company and the shareholders (principals).
- Law for accounting class so please answer in a business context
- Use desired sources but recommended to use MacIntyre’s Business Law (9th edition)
- Please use Harvard referencing system
- double spaced, arial font, 12 point font size, and use page numbers
- Please include a word count and a alphabetical order bibliography at the end
The decision reached by the House of Lords was that it is legally possible for one person to incorporate themselves into a limited company, and in doing so receive personal benefit from this structure in terms of limited liabilities.
This ruling established the doctrine of Corporate Personality which means that companies are regarded as individual legal entities separate from their members/shareholders or directors. This has been described as “the best instance” used to explain what agency is all about; if there is an employer (principal) then there must be an employee (agent) who acts on their behalf, but they are two distinct people under law and have different rights/responsibilities when dealing with each other within contractual agreements.
Therefore, understanding the concepts of agency, corporate personality and limited liability is essential when analyzing business organizations today; these three principles form the basis upon which all company structures operate – regardless of size or industry – thus making them critical components to consider when organizing any type of commercial enterprise.