Definition Of Equitable Estoppel

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In business law, companies are seen as legal persons that are independent of their director and shareholders. However, on rare occasions, the law would look behind the company and treat it as the same person as those controlling it. Therefore, the separate legal entity of a company is an impactful principle of law since the property of a company would belong to it rather than the shareholders, management, or the directors. As such, the future owners and liquidators would have a vested interest in the pursuit of claims of misappropriation of funds. A company is liable for its liabilities and debts. Moreover, limited companies provide a limited liability to their shareholders thereby making the company liable to legal actions until its assets …show more content…
Estoppel is characterized by reliance on some representation and a change of position, which is detrimental to the party claiming estoppel caused by the reliance and representation thereon. The doctrine of equitable estoppel is based on the principle of essential justice and fair play an comes about once one party lures another into a detrimental legal position as shown in Major League Baseball v. Morsani, 790, whereby it was held that the plaintiffs’ claims were barred by the statute of limitations. The principle of equitable estoppel acts as a shield rather than a sword, and seeks to punish the wrongdoer instead of the victim. It is meant to prevent a loss rather than aiding a litigant to gain …show more content…
This is not true since there are defenses to a contract, such as capacity to contract whereby for a contract to be valid, the parties involved must have the capacity to contract. A party gains the capacity to contract once they reach the age of majority and should be of sound mind. In Smith v. King (1892), whereby a firm of brokers sued for damages and it was held that the debt was contracted during minority thereby making it voidable. A contract should be signed without undue influence or misrepresentation or the terms of the contract are grossly unfair or there is a serious inequality of bargaining power. Business owners can avoid these misconceptions by hiring credible internal lawyers to help in drafting of contracts and any other legal requirements in the organization. It is also important to read and understand the terms of a contract before entering into any

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