VocabuLaw

Legal Person

What is it and what does it mean?

Description of the legal term Legal Person:

A “legal person” is an entity that is recognised by the law as having rights and obligations, akin to a natural person but distinct in its formation. Unlike a human being, who is recognised by the law as a natural person, a legal person is any subject matter other than a human being to which the law attributes personality. This concept is vital for the functioning of modern corporate and public organizational structures.

Legal persons can be divided into two main groups: corporations and other entities such as governments, NGOs, and sometimes partnerships. Corporations, for instance, can sue and be sued, own property, enter into contracts, and are subject to taxation. This allows them to operate in the business world by providing them with a structure that can carry out activities, engage in financial transactions, and be accountable for their actions, separate from the individuals who manage or own them.

The concept of a legal person is fundamental to the idea of limited liability. Shareholders of a corporation have their liability limited to the amount of their investment, and they are generally not personally responsible for the debts of the corporation. This encourages investment and entrepreneurship because individuals can participate in business ventures without risking all of their personal assets.

Furthermore, the existence of legal persons as entities separate from their members or owners allows for perpetual succession. This means that the entity can continue to exist even if the individuals who manage, own, or are members of it change. This continuity is essential for long-term projects and stability in commercial undertakings.

The rights of a legal person are enforced in the courts, which can be especially significant in areas like human rights law, where certain non-governmental organizations have been recognized as having the standing to bring cases before the courts to protect the rights of others.

Legal context in which the term Legal Person may be used:

For example, in the famous English case Salomon v. Salomon & Co., the House of Lords established the principle that a company is a separate legal person. Mr. Salomon had incorporated his sole trader business, transferring the business to a company in which he held the majority of shares, while members of his family held one share each. When the company went into liquidation, the creditors attempted to hold Mr. Salomon personally liable for the company’s debts. The House of Lords held that the company was a separate legal person and Mr. Salomon was not personally liable for its debts, enforcing the concept of limited liability.

Another example can be found in the sphere of international law. Amnesty International, a non-governmental organization, has often been granted standing before international courts to bring cases or provide briefs on human rights issues because it is recognised as a legal person, despite being a collective of individuals rather than a single natural person. This status enables the organization to campaign for human rights at a level that individual activists could not achieve on their own.

The concept of a legal person is essential to allow collective grouping of individuals and resources to function with a semblance of individuality for the purposes of law in areas ranging from contracting to legal accountability. It is this nuanced understanding and application of the notion of legal personhood that underlies much of commercial, administrative, and human rights law in Britain and provides the framework within which corporate activity is conducted and rights advocacy groups operate. The legal person stands as one of the keystones of modern legal systems, facilitating complexity and the flourishing of a diverse range of group activities within a well-ordered societal structure.

This website is for informational purposes only and may contain inaccuracies. It should not be used as a substitute for professional legal advice.