Corporate Personality - Essay Example

During the contemporary period, businesses operate in a dynamic and competitive environment whereby they seek to gain advantage in terms of market share over the other competitors. Against this background, it can be noted that businesses strive to create unique brands that will make them different from the other competitors while at the same time attracting a large number of customers. People are usually attracted by the brand name and in turn, they can develop a sense of identity with the manufacturer of that product which is the reason why Chief Executive Officers (CEO) of large corporations as well as marketing managers of even smaller organisations are not hesitant to spend large sums of money in creating brand awareness through advertisements which also helps create the identity of the organisation among its customers. Against this background, it can be noted that the concept of “corporate personality” is topical and is indispensable especially to organisations which are seriously concerned about making profits as well as ensuring their survival and viability in an environment characterised by stiff competition. In order to get a clear understanding of the concept of corporate personality considering the attitude of the courts to this important part of company law, it is imperative to begin by explaining what corporate personality is. Corporate personality is mainly concerned with establishing and maintaining the identity of a company (Gibson 1998). This involves creating the brand name or logo of the company which will be used as its identity to distinguish itself from the other companies operating in the same industry. In a free market, competition by various players is so intense such that there is need for companies to come up with strong brands that will make them different from the other players. This is particularly very important in that it will allow the customers to choose and identify with particular products which can help generate more revenue on behalf of the customer. This also helps the organisation to position its unique brand in the market which can give it a competitive advantage. However, gaining competitive advantage is not the only purpose of corporate personality but there is more to that than what is generally believed by many people. The operations of different companies are guided by the legal framework obtaining in that particular country. The laws in different countries are also particularly designed to protect the citizens from losing their money when they enter into agreements with organisations which may not be truthful. Against this background, McGregor (2000) suggests that governance is practiced at different levels and the law is designed to protect all the stakeholders involved. As far as corporate personality is concerned, the essence of law is a two-fold exercise which is concerned with protecting the interests of the company as well as those of the other stakeholders such as the customers as well as the employees. The company can sue if there is an infringement of trademark or breach of contract against it while on the other hand, it is liable to be sued by the customers in the event of selling defective goods or in the event where it breaches its contract with employees or its partners in business. The company brand name is a registered trademark under the companies’ law and it seeks to protect the interests as well as the operations of the company in a just manner. The law is there to protect the company and its brands under its trade mark and no other company may be allowed to trade under the same trademark unless otherwise agreed by both parties. Corporate personality gives the organisation the opportunity to develop a strong corporate brand as well as protecting other copycats which may emerge in the market. Essentially, this gives the company the right to sue in the event that its rights have been violated by the other organisations. The company has the right to report the case to the court of law which is the highest arbiter to solve any dispute in society. Any company with a registered trademark has the right to sue should there be any incidences of insincerity where by the other companies may try to imitate the registered brand of the other company without consent. Coca cola for instance is a globally renowned soft drink manufacturer and it has the sole right to trade its brands under its registered trademark. This is not only limited to large multinational companies but any registered company with a trade mark. According to Zivin and Billingsley (N.D), the case of Coach, Inc. v. We Care Trading Co., Inc., 2001 U.S. Dist. LEXIS 9879 (S.D.N.Y. 2001) can be used to illustrate that any given company has the right to sue if the trademark has been infringed. According to this case, a family business in New York copied a design by a distinctive leather designer company which made hand bags. However, in this case, there was overwhelming evidence to show that indeed, there was infringement of trade dress where the defendant had acted in bad faith through copying a design from a well established leather designer. This warranted the attorney’s costs and fees though the plaintiff could not recover the profits from the defendant. This case clearly illustrates that Coach being a registered upmarket manufacturer of leather product has a protectable trade mark. Legally, corporate personality through trademarks is meant to protect individual companies from unscrupulous companies who are bent on making profits out of the efforts of the other people. On the other hand, the concept of corporate is also meant to protect the interests of the consumers and the other stakeholders. By virtue of having a corporate personality that is protected by the law, the organisation would have committed itself to fulfil particular obligations upon which failure to uphold them may result in legal action being taken against them. The law of contract in particular is meant to protect both parties involved and it can have a bearing on the concept of corporate personality. Koffman & McDonald (2007:1) define a contract as, “a legally enforceable agreement giving rise to obligations for parties involved.” This entails that whenever two different parties enter into an agreement which becomes the contract, there would be binding terms of the contract that would make them keep their obligation to meet the agreed terms and conditions. Simply put, if you promise that you will do something for another person and in return, that person agrees to pay you something, then you and that person have made a contract. In the event of breach of contract, the company can sue the offender or it can be sued if it breaches the contract. As going to be illustrated in detail below, it can be noted that this is a twofold process where the company can be at both receiving ends. The legality of a contract is meant to protect the interests of both parties involved. With regards to employment contracts, there ought to be written agreement which binds the two parties to honour their contractual obligations which can be enforceable in the court of law should one party defaults. An employer offers a job where payment would be made when the job is done and this agreement is legally binding always until there is another agreement reached to terminate that contract. For instance, in Louise Caroline Nursing Home, Inc. v. Dix Constr. Corp. (1972), a construction company that did not finish construction on time is only liable for the amount it would cost to finish construction minus amount not paid. Nothing is owed to the plaintiff in this case since the amount not paid is more than finishing the work (http://www.garretwilson.com/education/institutions/usf/law/contracts/cases.html). It can be noted in the above case that once a contract has been made and both parties involved are aware of the contractual obligations to fulfil, this becomes legally binding and is enforceable in the event of breach of that contract by the other party. A law suit can be filed in the event that the other person involved in the contract has breached the terms and conditions of the agreement. The judiciary is the final arbiter of disputes among different people hence it would be legal to file a lawsuit against a person who breaches a contract so as to promote justice where no other person can be disadvantaged out of something they would have formally agreed on. Besides the employment contracts, there are also different types of business agreements where two or more parties agree to enter into a business contract. For instance, when a seller and buyer agree to exchange goods or services for something, then they have entered into a contract which would be legally binding. A good example can be drawn in a scenario where the seller agrees to sell a motor bike to the buyer who also agrees to buy. By virtue of reaching an agreement to proceed with the transaction, it can be noted that a contract has been formed. Another form of business contract involves exchange of services for something. In some cases, one part fails to live up to the expectations of the agreement which can be described as a breach of contract. Where it can be proved by the court of law that another party has been disadvantaged, the plaintiff will be entitled to be compensated for the loss. With regards to the concept of corporate personality, it becomes easy to identify a particular company with its products. To a certain extent, the concept of corporate personality can help the courts to deal with corporate crime. For instance, vicarious liability can be labelled to a company if one of its employees commits a crime while on duty but flees from the scene. In the event that the offender has been wearing a uniform or driving an identifiable vehicle with a particular company, then that company is vicariously liable despite the fact that that the offender has not been identified. An example can be drawn from Mallan v Lee (1949) 80 CLR 198. This is meant to encourage the company directors to ensure compliance with the law as well as protect the safety of the citizens. This also helps the employees of a particular organisation to desist from engaging in acts that will put the company name into disrepute. Over and above, it can noted that the concept of corporate personality is primarily concerned with establishing and maintaining the identity of the organisation. This company law is very important as far as the attitude of the courts is concerned since this is meant to give protection to all the parties involved. References Basson A.C. (2002). Essential labour law. Centurion. Labour Law Publications. Contract cases (N.D). Available at: http://www.garretwilson.com/education/institutions/usf/law/contracts/cases.html: [Accessed on 08 October 2010]. Duplessis L. (1999). An introduction to law. 3rd Edition. Juta Gibson G.T.R. (1988). South African mercantile and company law. Cape Town. JUTA & Co LTD. Koffman L & McDonald E. (2007), The Law of Contract, 6th Edition, Oxford University Press. E-BOOK. Available at: http://books.google.co.za/books?id=8JtwkQrAC_kC [Accessed on 8 October 2010]. Kleyn D. & Viljoen F. (2002). Beginner’s guide for law students. 3rd Edition. CT. JUTA McGregor L (2000). The human face of corporate governance. London. Palgrave Norman H. Zivin and Ronald S. Billingsley, Jr.,(N.D) You Can Win Attorney’s Fees and the Infringing Party’s Profits in Trademark Infringement Cases. Cooper & Dunham LLP. New York City. http://www.iln.com/bullet_iln_two_four/zivin.pdf [Accessed on 08 October 2010]. Todd C. (2001). What you must know about contracts of employment. CT. SiberInk. Read More