Discuss the rationale and impact of the decision on company law - Assignment Example

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The rationale of the case Salomon v Salomon & Co Ltd [1897] AC 22 was to reaffirm and to re-establish the principle of the supremacy of law over the opinions and personal views of the judges, which had been abstained by the lower courts in the ruling under the case Broderip v…
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Download file to see previous pages The conflict between the personal opinion of judges and the legal provisions of the law has been in existence for years, and this conflict has resulted in the determination of cases in a manner that does not reflect the legal provisions. However, under the case Salomon v Salomon & Co Ltd [1897] AC 22, the supremacy of the law as the principle that guides courts in determining cases was cemented. This is because; in both the High Court and the courts of appeal, the judges held that the merit of the case Broderip v. Salomon [1985] 2 simply warranted the consideration of Salomon Ltd as an ‘alias’, thus allowing for the treatment of Salomon Ltd and Mr. Aron Salomon as one and the same thing (Rickett, 1998:16). Therefore, the High Court and the Court of Appeal ruled that Mr. Aron Salomon was responsible for paying the debts incurred by Salomon Ltd.
However, the House of Lords unanimously overturned the ruling, by holding that the opinions and personal perspectives of the judges were subordinate to the provisions of the law, and the provisions of the law under Companies Act (1862) had provided that a company could be incorporated for as long as it had seven members, regardless of whether the members contributed to the company in any substantial way or whether they were just mere individuals enlisted as part of the company ownership (Sealy, 2010:36). Thus, the relevance of the case Salomon v Salomon & Co Ltd [1897] AC 22 in company law is that it cemented the position of law as the principle reference for which the courts should base their judgments, while placing the opinion and fair judgment of the juries subordinate to the principle of the law. This is considering the fact that judge Vaughan Williams J. of the High Court had applied his opinion in ruling the case Broderip v. Salomon [1985] 2, whereby he opined that as opposed to the application of the legal provisions of Companies Act 1862 in the case, it was a bit more ...Download file to see next pagesRead More
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