Normally legal personality is granted by law to all human beings. Whoever neglects this law, whether written or unwritten, is necessarily unjust and wicked. However, the argument from concession theory to fiction theory strongly suggests that legal fictions are intended at least in part to be ontological fictions as well. Articles reconceptualizing the theory of the firm penn state law. The restatement third of agency updates and attempts to explain the law, but its explanations are limited in scope and at times unpersuasive. A company thus has legal rights and obligations in the same way that a natural person does.
Savigny 12 sees the legal entity as an artificiallycreated being that is capable of owning property but that lacks free will. O this theory talks in contrast with the fictitious theory. The main defect of the fiction theory according to the realist jurists was the ignorance of sociological facts that evolved around the law making process. Jan 30, 2015 the fiction theory, however, answer satisfactorily the civil and criminal liability of corporations. According to this theory, the legal personality of entities other than human beings is the result of a fiction. Reappraising the real entity theory of the corporation. A personality of a company is basically the legal recognition of its own individual independent presence in. Pdf on jul 17, 2015, stefan nicholas vella and others published legal theory and science fiction. Whereas normbased commercial law is largely untheorised as a much too heterogenic branch of law, there is more discussion on the theoretical foundations of corporate law. One might say that corporations were legal fictions in the nineteenth century and predominantly became legal entities in the twentieth. Theories of corporate personalities law, lawyers and legal. One of the most elaborate statements of natural law theory can be found in aquinas who distinguished four types of law.
Theories of law natural law, legal positivism, the morality. This theory is different from fiction theory on the point that it identifies law with the state while fiction theory does not 6. Century english company law and theories of legal personality, 1. A legal fiction is a fact assumed or created by courts, which is then used in order to help reach a decision or to apply a legal rule. Further the authors have analysed in detail the five theories of corporate personality namely, fiction. Theories of corporate personalities law, lawyers and. Administrative appeals tribunal act 1975 australia. It first considers berle and means concern about the separation of ownership from control, particularly managers lack of accountability not only to. This law is right reason, which is the true rule of all commandments and prohibitions. The law, in creating legal persons, always does so by personifying.
Icsi house, 22, institutional area, lodi road, new delhi 110 003. Pdf corporate personality is an entrenched legal principle of the english. Introduction despite its age, the longstanding debate. Hans kelson 18811973 introduction credit of reviving the original analytical legal thought in 20th century pure theory of law. The person in imagination or persona ficta of the corporation.
According to savigny a personality is attached to corporations, institutions and funds by a pure legal fiction. Gierke is a leading exponent of realist theory which refutes the fiction theory. He was a professor of law at the vienna university. The purpose of this chapter is to explain the main theories and explain why they are unsatisfactory. For students and generalists alike, essentials of the theory of fiction. It was followed by sir fredrick pollock, geldart, maitland etc. The concept is used almost exclusively in common law jurisdictions, particularly in england. According to salmond, corporation is nothing more than the outcome of metaphor and fiction. In this book, brian cheffins discusses the inner workings of companies, examines the impact of the legal system on corporate activities and evaluates. France and germany against the fiction theory of corporate per sonality will be found. Duke university press essentials of the theory of fiction. The main defect of this theory is that it exists in the eyes of law only. Fiction of law i hakan gustafsson the pure theory of law is not dead, it just smells funny. For there is but one essential justice which cements society, and one law which establishes this justice.
This theory was propounded by gierke and maitland was the. Thomas aquinas and natural law theory natural law theory like legal positivism has appeared in a variety of forms and in many guises. The law, in creating legal persons, always does so by personifying some real thing. The starting point for this reconception of the common law s history is the device of reasoning which we call the legal fiction. If corporations are creatures of state law and nothing else, they almost certainly must be artificial, invisible. Juristic or legal person is one to which law attributes legal personality.
Established by the house of lords in the salomon case, ii this principle delineates the legal relationship between a company and its members. Trischa manntrischa mann, audrey blundenaudrey blunden. According to duff, the legal realist gierke considered that the fiction theory was. Law minimise the importance of corporate legal personality. Early english corporate law incorporated the fiction theory into the common law9 and the theory is thought to have governed american corporate theory from the founding to the mid. Dalley abstract despite the ubiquity of agents in the modern world, agency law does not have a coherent explanation or unified theory. A company is a corporation an artificial person created by law. The realist theory is also known as the sociological theory of the group personality of the corporation. The separate legal personality of a company, as aforementioned, represents one of the most fundamental principle of company law.
This can be positive, in that it can enrich the rules of the international chamber of commerce and improve. Titles in the core text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. Companies act 1961, clearly incorporated the english law doctrine of. Separate legal personality of a company law teacher. The realistic theory maintains that a corporation has a real psychic personality recognized, and not created, by the law. Companies and partnerships compared a a company can be created only by certain prescribed methods most. The fiction theory of corporation is said to be promulgated by pope innocent iv 12431254. The assumption that a certain thing is true, and which gives to a person or thing a quality which is not natural to it, and consequently establishes, a certain disposition, which, without the fiction, would be repugnant to reason and to truth.
Savigny is the strongest proponent of the traditional theory, better known as the fiction theory. What follows is an attempt to make some suggestions, arising from an ongoing investigation of legal fictions in the history of common law thought, concerning the significance of legal fictions for the theorist. Ten new selections address issues such as oral memory in african american fiction, temporality, queer theory, magical realism, interactive narratives, and the effect of virtual technologies on literature. This chapter looks at history and theory associated with corporate governance. This section contains free ebooks and guides on law books, some of the resources in this section can be viewed online and some of them can be downloaded. This theory says that corporation has a real personality not a fictitious. Literature may be understood as a text that is selfconsciously artistic, rather than as a text that is used as a medium through which to convey information, for example a newspaper article. He regarded corporations as exclusive creations of law having no existence apart from their individual members who form. Fiction theory the roman law inspired fiction theory8 was the first scientific theory of legal entities to arise. Transcending the deregulation debate, oxford university press, new york, 1992.
Thus, the plaintiffs were unable to impose liability based upon the alter ego theory. Salmond and holland are the supporters of this theory. The personality of corporation is different from the personality of its members, that means there is a double fiction in the case of corporation. Theory, structure and operation is the first united kingdom law text to use economic theory to provide insights into corporate law, an approach widely adopted in the united states. From the discussion on jurisprudence theories of corporate personality, it is observed that main arguments lie between the fiction and realist theories. On the origins of the fiction theory, see also john dewey, the historic background of corporate legal.
The fiction theory dominated english and american corporate law for the first. A fiction of law is stated from lectric law library on the net as follows. Gierke was the exponent of this theory and tried to criticise the fiction theory. Legal personality, being an artificial creation of the law, may be conferred on entities other individual human beings. In order to understand fiction theory, one must pose questions about fundamental terms such as text, narrative, literature, fiction, etc. An organic law is a fundamental, foundational law such as a constitution underpinning a government, corporation or other organisations body. Though it is not necessary for law to personify, since the law might.