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6 Cards in this Set

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Salomon v Salomon & Co Ltd

1. Salomon owned 2,001 shares, six other family members had one each. Also the main creditor. Fell into serious debt




2. Vaughan Williams J found in favour of liquidator at first instance that the company was a 'mere nominee' of Salomon.




3. Court of Appeal slightly different tack, but considered it unwarranted perversion of company law legislation too. In essence, regarded one-man companies as illegal.




4. House of Lords unanimously overturned CoA. Benefits available to small business owners too. Legislation said nothing about the members being independnet from the main shareholder.




5. Lord McNaghten: 'The company is at law a different person altogether from the subscribers to the memorandum'.

Employing yourself.

Lee v Lee's Air Farming




Mr Lee was effectively running his own business. Subsequently killed, widow seeks workman's compensation, they say no because he's not a company. Can't be a worker if he's employing himself.




However, being distinct legal entities, one may employ the other.

Unfair results (picketing pub)

Roundabout Ltd v Beirne





Exceptions to Solomon

Fraudulent Purpose (Re Bugle Press)




>NOT mismanagement (Barrington J in Dublin County Council v Elton Homes Ltd)<




Contractual Obligations (Cummings v Stewart) (Gilford Motor Company v Horne) (Nothing to prevent you avoiding a future obligation)




Agency (Smith Stone & Knight v Birmingham Corporation)




Single economic entity ( Denning MR in DHN Food Distributors Ltd v Tower Hamlet London Borough Council) ( Costello J in Powers Supermarkets Ltd) Criticised by former CJ Keane as being too wide. Also doubted in English case law.

Agency criteria from Smith Stone

1. Profits of subsidiary treated as profits of holding




2. Persons running subsidiary appointed by holding




3. Holding "brains" of trading venture




4. Holding company govern adventure, decide what should be done, capital etc.




5. Profits of business result of skill and direction of holding




6. Holding in effectual and constant control

Fyffes v DCC

Shares traded in plaintiff company. At the time, defendant had price-sensitive info.




One of the suggestions argued by the defendants was that they didn't trade the shares at all, because they were actually traded through a subsidiary of DCC.




Laffoy J reckoned DCC ought to be considered single economic entity.