Soloman.v. Soloman Case Solution
The Principle of Salomon
The principle of Solomon is very simple. However, this law is seen as a benchmark in the Irish corporate law since Solomon was a successful leather merchant who was doing his business successfully. Afterwards, he formed a Limited company and took debt from the market and got in to financial trouble. The company became bankrupt and creditors decided to sell all the assets of the company. Finally, Solomon appealed in the court to claim that was not a fraud and was not willing to cheat anyone but the things which happened wereonly a financial mismanagement.
However, the appeal didnâ€™t work for him as the government saw him as a fraud and made decision in favor of the creditors, arguing that it was the responsibility of Solomon to secure all the debts as a principle creditor and shareholder. However, the House of Lordscourt stated that the company was properly set up, and that there was no fraud and therefore, Solomon was a distinct entity from his company. Lastly, the directorship, his shareholdings and his rights were independent.
This was the overview of the case and the basic principle,however, the same case has been seen many times in the corporate history which why this case is known as the principle of Solomon in the Irish corporate law and industry. In the next section the corporate law and some of the main dimensions will be highlighted as the writer was asked to write the basic dimensions and utilities of the Irish law pertaining to the Solomon Principle. (Teacher, Company Law , 2016)
Piercing the Corporate Veil
This is the most sensitive and dangerous area of corporate law where the court is willing to make separation among the firm and its principle investors, creditors and shareholders. However, we can identify who are the separate owner, creditors and shareholders by looking at the discussion above asthe Irish law says that it is the primary duty of the principle shareholder and creditor to make sure that all the debts are secured.Moreover, it has become a basic principle of the Irish corporate law since, the decision was taken by the House of Lords with the case of Solomon
The Impact of Salomon V Salomon & Co. Ltd. (1987)
There were several impacts which arose after the decision made by the English court in the case of Solomon. The basic impact which occurred on the corporate sector was that the corporate sector of Ireland particularly started to be cautious as it had secured all the debts which could lead companies towards bankruptcy or intense pressure from the creditors to liquidate the company and to sell all the assets to pay off their debts. The other major impact which the sector faced that many of the companies started to become limited following the trends of the Solomon company and worked as private and public entities successfully. Finally, the investors and creditors also started to ask companies to secure their debts to prevent form credit risk, insolvency and other corporate and legal obligations.
Finally, it can be said that there are numerous factors which could affect the companies working in the Irish region. Moreover, companies are more cautious these days about their mode of payments and other credit related policies as we discussed that Solomonâ€™s case changed the dynamics of the Irish and British corporate sector. Furthermore, the legal entities also use Solomonâ€™slaw as a benchmark to analyze the legal progress of companies working in the Irish region. However, this principle is also a benchmark for the British law. As we discussed earlier that the principle of Solomon is very simple,however, this law is seen as a benchmark in the Irish corporate law,since Solomon was a successful leather merchant doing his business successfully. Afterwards, he formed a Limited company and took debt from the market and got into financial trouble……………..
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