The rule in Salomon v Salomon & Co [1897] AC 22 has been described as Essay - 5

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 - Essay Example However, this paper argues that such balance has positive implications. The House of Lords decision in the case was good. At various general levels, Salomons case had universal recognition of the authority and principle where corporations were separate legal entities. Cases of this nature had firm establishment of incorporation, and new as well as separate artificial entities came to existence. From a legal perspective, corporations are distinct persons that have their personality independent of and distinct from the persons forming it, invested money in it, and directed and managed the operations (MÃ ¤ntysaari, 2006, p 34). The identity that corporations are separate legal entities in their right forms grounds for modern corporate law such as in Department of Trade and Industry v MacLaine Watson & Co Ltd. Every legal system that attains various levels of maturity appears to enjoy compulsion by the increasing complexities of human affairs and creation of persons without human characteristics. Consistency with such observation illustrates that various central and essential notions that give logical symmetry in industrial feudalism are personification of industrial enterprises. The support awarded to principles of legal personality separateness is shared among academic commentators and are unbroken into judicial and legislative circles (Ferran & Ho, 2014, p 312). The principle has enshrined depictions in section 124 in Corporations Act. The judiciary has consistent reaffirmations of the need of treating the legal doctrine with few exceptions. Subsequent Australian and English decisions of the court uphold the Salomon principle. Since Salomons case had the decision, the entire separation of company and members is rather evident. The ruling stands the test of time even with few exceptions (Routledge. 2010, p 352). In theory,