Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Q. 1.
In the case of Salomon v A Salomon and Co Ltd [1897] AC 22, it has evolved that a
corporation is a separate personality of legal nature, which can be distinguished from its
owners and managers. This principle is known as the doctrine of corporate veil. The acts
done by the directors and the owners of the company, on behalf of the company, will be
construed to be binding upon the company and the directors and owners will not incur any
personal liability with respect to the actions taken on behalf of the company. This principle
extends immunity to the directors and the owners of the company from incurring any
personal liability with respect to the acts that has been carried out for the sole purpose of
conducting the affairs of the company. This makes a company to depict a legal personality. It
has the power to sue and be sued by another personality. In this case, the court refused to
pierce the corporate veil and hold the directors liable for the acts of fraud and sham that has
been affected by them in the disguise of the name of the company. The court applied the
doctrine of corporate veil to provide immunity to the directors. In this case, the court waived
the liability of the directors that they have incurred for the purpose of acting beyond the scope
of their position in the company.
Q. 2.
Partnership depicts relationship or an arrangement in which at least two persons forms a
business to be run commonly with a view to earn profit and distribute such profit among
themselves in accordance with the agreement between them. The main feature of a
partnership business is the common business that it is run jointly by the partners. Another
important feature of a partnership business is the motive of earning profit and distributing
such profit among the partners in compliance with the agreement made between them the
partners. The firm in case of partnership business is treated to be a single personality and the

2BUSINESS LAW
partners are treated as the agents of the firm as well as of the other partners. In this kind of
business the farm is treated as the same personality along with its partners and will be held
liable for all the acts that has been done by another partner under the name of the firm.
However, limited liability partnership construes a kind of partnership in which the business is
treated as a separate legal entity to that of its partners in this form of partnership the partners
are not to be treated as liable personally for the acts under the name of the company.
Q. 3.
Agency is a relationship between two person where one person delegates the other to act
on his behalf in affecting transactions. In this form of business relationship the acts of the
agents are binding upon the principal when the agent has acted within his authority and has
not travelled beyond its scope of authority under the agency relationship. The relationship of
agency is generally formed through an agreement either formal or informal between the
principal and the agent for the purpose of authorising the agent to act on behalf of the
principal. The same can be illustrated with the case of Waugh v HB Clifford and Sons Ltd
[1982] Ch 374. The agreements, on one hand empowers the agent to act on behalf of the
principal and on the other hand makes the acts of the agent binding upon the principal.
Agency relationship is generally created by the principal for delegating his work to the agent
as it is not always possible for a principal to carry out his own transactions himself owing to
the circumstances. These circumstances includes the principal being overburdened with work,
physical absence of principal from the place where the transaction needs to be effected and
any other factor that makes the creation of the agency mandatory.
Q. 4.
Apparent authority implies an authority, which is not actual. However, it is also
considered to be a valid authority, which has been extended towards an agent for the purpose