The Significance of Legal Personality - Essay Example

?Topic:  explain the significance of legal personality. As part of your explanation you should identify why certain categories of people have limitedlegal personality. Introduction Natural and artificial legal personalities are identified by law. Companies and humans are divided into artificial and natural legal personalities (Probert, 2011). Each legal personality has distinct and separate legal rights and obligations, identified and defined by the law. However, all humans do not have a complete set of rights and duties. They vary from person to other, depending on age, sex, legal capacity, and social roles as well. Consequently, some humans are assigned the label of limited legal personality, having limited rights in comparison with other humans. For example, law does not allow a bankrupt to become a director of a company, or a magistrate or a Member of Parliament. Also, mentally ill person has an insufficient legal capacity; consequently, he or she is disallowed to enter into a contractual relationship with any party. In the following pages, this paper is going to explain natural and artificial legal personalities and limitations on some legal personalities. Natural legal personality with beginning and end of life A natural legal personality comes with certain legal rights and obligations. Such legal rights are assigned to natural persons who qualify to have a legal capacity. The legal capacity is considerably helpful while deciding the rights and duties; depending on different social roles such as father and husband, employer and employee, voter and householder. However, law on the basis of occupation, age, sex, income, nationality and other relevant identifications that can be considered appropriate and relevant by the law makers, ascertain legal rights and obligations. Legal rights can only be assigned to living persons. However, some law makers may argue that an unborn foetus can have life as he or she can breathe. But, still the law has not assigned the legal status to an unborn foetus of being a legal person. Law has not defined death. There is not an exact definition that can bring an end to a natural legal personality. In history, heart beating has been used to ascertain the occurrence of death when the heart beating stops. However, the latest medicine advancement has also ensured the functioning of heart with the use of machine. Case law: R v Malcherek and Steel [1981] 1 WLR 690 Facts: A woman was stabbed by a man. She was kept alive with the help of a life-support machine, however her brain was dead. Held: Lord Chief Justice Lane, in the Court of Appeal, defined death. In the verdict, the Lord Lane remarked that death legally occurs when by the irreversible death of the brain stem, whose function is to direct the basic body function like breathing. After death-legal personality Law has not defined an unlimited type of natural legal personality. And, this limited legal personality is relevant even after the occurrence of death. The testator, a person who wrote the will, may be allowed to receive the same legal rights after his or her death in case he or she wants to distribute property according to the wishes. The court will ensure the according implementation of the terms mentioned in the will document. In this way, a possibility of dispute is considerably reduced which normally occurs in the process of property sharing. Natural legal personality: limitations Some legal personalities have limitations. And these limitations do not allow them to have the same sort of legal rights and duties given to other persons. It is their insufficient legal capacity that disallows them to enter into a legally binding contractual relationship. Bankrupts A person who is unable to pay liabilities is declared as bankrupt by the court. As a result of such bankruptcy, the person is disallowed to become an MP, or a magistrate, or a director of a company. Mentally ill Mentally ill person has an insufficient legal capacity to understand the resultant implications of his actions. Consequently, the law does not make valid if he enters into a contractual relationship. Children Comparatively, children have limited reasoning capacity. The law provides a full legal status when they reach at the age of 18. However, minors can be charged with criminal responsibility as they sufficiently capable to commit a crime. Artificial legal personality In United Kingdom, a company is entitled to ask for the status of legal personality (Teubner, 1988). The artificial legal personality separates and assigns an individual legal existence to the company. As a result, the company becomes a distinct legal entity totally separate in comparison with its shareholders. In that way, the shareholders would have only right on their shareholding not on the company, they cannot own the company (Davies, 2002). On the basis of its separate legal existence, the company on its own basis, can enter into a contractual relationship, can own its assets and liabilities; and at the same time it can sue and can be sued. Case law: Salomon v Salomon & Co Ltd (1897) Facts: Mr Salomon was a managing director and owned majority shares of the limited company. The company was liquidated as it became insufficient to perform successfully. As a result, some creditors sued Mr Salomon to personally repay the amount of loan owned by the company. Held: Mr Salomon is disallowed to repay personally to the company creditors. Being a managing director of Salomon & Co Ltd, Mr Salomon has separate legal personality as the Salomon & Co Ltd is legally allowed to function under a distinct artificial legal personality. As a result, Mr Salomon cannot be personally responsible to repay the credit of the company. Case law: Lee v Lee’s Air Farming Ltd (1961) Facts: Mr Lee had a majority shareholding in Lee’s Air Farming Ltd besides being a governing director of the company. The company was paying insurance policy under the Workers’ Compensation Act. His widow claimed for compensation after the sudden death of Mr Lee. Held: Mr Lee’s widow is entitled to receive compensation under the Workers’ Compensation Act. The Privy Council in London held that Mr Lee and Lee’s Air Farming Ltd are separate legal personalities; they can enter into a contractual relationship. Conclusion Both have legal personality. A person is defined as having a natural legal personality, and a company is enshrined with the status of artificial legal personality. A person has legal rights with legal obligations, identified by the law. And the law gives them legal rights when humans born alive. And the legal status is given when they reach at the age of 18. However, each legal personality is not given a complete set of legal rights. As a result, some persons have limited legal personality. Such as, mentally ill persons are not allowed to enter into a contractual relationship as they are incapable to fully take into the subsequent consequences of their actions. Due to their limited reasoning understanding, children are not allowed to make a contract. Additionally, a declared bankrupt is not capable of becoming an MP. But, artificial legal personalities such as companies; have separate legal status, separating them from management and shareholders. Consequently, on their behalf, companies can enter into a contract, can own assets and can repay their liabilities. In case, a company becomes financially insufficient and is unable to repay its liabilities, the law does not permit that its shareholders be held accountable for that. References 1. Davies, P., (2002) ‘Introduction of Company Law’, Oxford, Oxford University Press. Pp. 257. 2. Lee v Lee’s Air Farming Ltd (1961), [Available at: http://www.londoninternational.ac.uk/current_students/programme_resources/laws/subject_guides/company_law/company_law_ch3.pdf] [Accessed on: 24 April, 2011] 3. Probert, R 2011, ‘Family Law in England and Wales,’ Kluwer Law international; Netherlands. 4. R v Malcherek and Steel [1981] 1 WLR 690 [Available http://www.lawstudentforum.co.uk/threads/medical-treatment-novus-actus-interveniens.26915/ [Accessed on: 24 April, 2011] 5. Salomon v Salomon & Co Ltd (1897), [Available at:http://www.londoninternational.ac.uk/current_students/programme_resources/laws/subject_guides/company_law/company_law_ch3.pdf ] [Accessed on: 24 April, 2011] 6. Teubner, G., (1988), ‘Enterprise Corporation: new industrial policy and the essence of the legal person’, American Journal of Comparative Law 36, pp. 154-155. Read More