Company and Partnership Law Essay Example | Topics and Well Written Essays - 2250 words

Company and Partnership Law - Essay Example This principle is termed as the Salomon Principle. The paper first discusses the issue of Salomon litigation. The doctrine of the legal entity came from the Salomon case. The facts and findings from the case disclosed that the owner incorporated firms where the family members were the shareholders. The issue and problem came up when the business of the company turns to be bad. The assets value was not sufficient to pay the creditors of the company and that of the owner. The bibliography of Aron Salomon was a leather merchant and wholesale boot maker who initially ran their business having a single owner. In 1892, his children became interested in managing the business in consequentially making Aron decide to manage and convert the business as an organization called Salomon & Company Limited, with a aim of transforming his leather and boot-manufacturing business to the Company. The members (shareholders) of the Company were to be Aron Salomon and his family2. Aron Salomon engaged himself into an agreement with Adolph Anhalt. Adolph Anhalt is considered the trustee of the company. They settled the terms that assuming the case of transferring the business occur. The agreement included the part payment where the Aron Salomon was to receive  £10,000 in debentures showing proof of money loaned out to the Company in that amount. During that period, the legal framework allowed that seven people subscribe to be the company members and owners of the company. As mentioned above, the members were Aron Salomon, Aron Salomon wife, and Aron Salomon children. His sons took control of the company with Aron Salomon as managing director He went ahead to sell his business to the Company for close to  £39,000, with  £10,000 being a debt to Aron and the debentures would serve as evidence. Salomon therefore became the Company’s main shareholder and creditor. On the following year (1893), the Company became liquidated; the arrangement