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The rule in Salomon v Salomon Co Ltd 1987?

Answer:

Simply put the rule in Salomon v Salomon is as follows; where a company has beenlawfully incorporated it becomes a separate personality (i.e. is recognised as an artificial person) from its directors/shareholderszperiodz Therefore, any liability incurred by the company is limited to the company and to recover creditors have to sue the company and not its directors/shareholders since liability does not extend to them but is limited to the Company. This distinction is important for both the directors of the company and those entering into contracts with the Company. See also Lee v Lee's Air Farming [1961] AC 12 and Adams v Cape Industries plc [1990] Ch 433

Contrast this with a sole trader where the liabilities of his business are also his and he may be sued in order to recover what is owed by his business.

First answer by ID3489564939. Last edit by Kennieb. Contributor trust: 0 [recommend contributor ]. Question popularity: 9 [recommend question].

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