The Company and the Outside World: Contractual, Tortious and Criminal Liability

These flashcards cover key legal concepts related to the company's operations and liabilities, focusing on contractual, tortious, and criminal aspects, important for understanding corporate law.

Separate Legal Entity

A company operates as a distinct legal entity separate from its shareholders, managers, and employees as established in the case Salomon v A Salomon & Co Ltd (1897).

Limited Liability

Shareholders are not personally liable for the debts of the company, only liable for unpaid amounts on their shares, as per the decision in Salomon v A Salomon & Co Ltd.

Primary Liability

This occurs when a company is liable for actions undertaken in its own name, similar to the liability of an individual.

Secondary Liability

A company can incur liability for the actions of another individual, typically an employee or agent, under certain circumstances.

Promoter

An individual who undertakes to form a company and takes necessary steps to start it, which may include negotiating agreements and preparing the company's constitution.

Fiduciary Duties

Legal obligations promoting loyalty and good faith in which promoters must refrain from unauthorized profits or conflicts of interest.

Ostensible Authority

The authority an employee appears to have based on representations from the company, allowing third parties to rely on such appearances.

Actual Authority

The authority expressly or implicitly granted to an employee or agent to act on behalf of the company.

Incorporation

The legal process in which a new company is formed, recognized as a separate legal entity, and enabled to enter contracts.

Tortious Liability

Legal responsibility arising from a company's or individual's violation of legal duties resulting in harm or injury to another party.

Criminal Liability

A company can be found guilty of committing a crime if the actus reus (the act itself) and mens rea (intention) can be attributed to its directing mind.

Directing Mind and Will

The individuals within a company (typically directors or managers) whose intentions and actions are deemed to be those of the company itself.

Indemnity

A contractual obligation to compensate for damages or losses, commonly relating to liabilities incurred by company promoters during the formation process.