Business law Free Essay Example, 1500 words

However, the example relating to the case of Salomon v A Salomon & Co Ltd [1897] AC 22, which has been discussed above, may illustrate a clear idea about the notion of veil in operation. According to my opinion, the outcome of the case is not fair enough, because the acting of the company as a separate lawful body has deprived the creditors and the preference shareholders from obtaining their desired amount or share from the company. A company is not a living entity and therefore should not be made responsible for repaying the debts to the creditors. Rather, Salomon should be held responsible for repaying the debts. However, arguments also arise to the fact that if Salomon would be made responsible to pay off the desired amounts to the creditors and the preference shareholders, he had to use his personal assets for the purpose that might lead towards insolvency (LLRX, 2015). Lifting the ‘Veil of Incorporation’ Meaning of the Practical Terms In certain cases, it can be found that a veil is created over the personality of a company and this restricts the court to ascertain actual scenarios. We will write a custom essay sample on Business law or any topic specifically for you Only $17.96 $11.86/pageorder now With this concern, the term ‘draw aside the veil’ refers to the decision of the courts concerning lifting the veil with due regards to the underlying circumstances. On the other hand, the term ‘often do’ refers to the courts’ decision whether to â€Å"draw aside the veil† or â€Å"pull off the mask† (ACCA, 2015). These terms can be related to the case of Littlewoods Mail Order Stores Ltd. v. IRC. In this regard, based on the viewpoints of Lord Denning, the corporation i. e. Littlewoods Mail Order Stores Ltd. cannot entirely cast a veil, as it is involved in defeating public convenience and also justifying the conduct of any sort of wrongdoing. In this circumstance, the courts may pull off the mask and likely to observe the conditions underlying behind fulfilling the same (Blackwell’s, 2014). Circumstances under Which the Law Will Lift the Veil There are certain circumstances under which the law lifts up the veil. One of such circumstances can be ascertained as during the act of any fraudulent activity or wrong doing by the companies. Moreover, in case of group enterprises, the principle of ‘veil of incorporation’ may not be adhered and considering the economic realities, the court may adopt the decision to lift the veil. If the company is considered as the agent of proprietor or if war exists between the countries, the court will lift the veil considering the situation (Common Law Society, 2015).