Salomon v. A Salomon & Co Ltd [1897]

[1897] AC 22 · House of Lords · United Kingdom

business associations lawbusiness associations lawcorporate law

Issue

Was the company a separate legal person from its shareholder?

Held

Yes. Properly incorporated companies have separate legal personality.

Exam use

Review the ratio and reasoning before applying this case in problem questions.

Summary

Foundational corporate personality case.

Facts

A sole trader incorporated a company and became a secured creditor of it.

Issue

Was the company a separate legal person from its shareholder?

Held

Yes. Properly incorporated companies have separate legal personality.

Ratio Decidendi

A corporation is a separate legal person from its shareholders.

Reasoning

The Companies Act requirements were met, so the corporate form had legal effect.

Essay-Ready Explanation Generator

Version 1 of 4

Reference to Salomon v. A Salomon & Co Ltd ([1897] AC 22) strengthens a business associations law answer because the case reflects the principle that A corporation is a separate legal person from its shareholders. Applied to a problem question, the case should be used after identifying the issue as Was the company a separate legal person from its shareholder? The stronger essay move is to connect the material facts to the court's holding, then explain whether the present facts support the same conclusion or justify distinguishing the authority.

Significance

Foundational corporate personality case.

Related Cases

No related cases listed.

Exam Tips

Review the ratio and reasoning before applying this case in problem questions.

Revision Checklist

  • Name the issue before discussing facts so the marker sees the legal question immediately.
  • State the holding in one sentence, then use the ratio to explain why the court reached that result.
  • Use the citation and jurisdiction to show why this authority matters for the problem you are answering.
  • Pair this case with one supporting or contrasting authority if the question tests limits, policy, or exceptions.

Sources