The House of Lords held that in order to have an insurable interest in property a person must have a legal or equitable interest in that property.

Does Mr Macaura have an insurance interest?

Mr Macaura had no insurable interest in the timber. As a separate person, a company’s property belongs to the company, not its members.

What is separate legal personality in company law?

The separate legal personality of a company means that: Shareholders have limited liability; Debts and liabilities of the company belong to the company; Shareholders have no right to manage the business or enter into Transactions on behalf of the company.

Which case shows that a company has a separate legal personality?

Salomon v Salomon was the first case to establish the principle that a company is a separate legal person quite distinct from its shareholders and directors and that because of this, the directors and shareholders cannot be liable for the debts and liabilities of the company.

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Who has separate legal personality?

A separate legal entity is a person recognised by law – a “legal person”. The entity has its own legal rights and obligations, separate to those running and/or owning the entity.

Is corporate personality the same as separate legal personality?

A corporation is an artificial person in law distinct from its members (Shareholders and employees) with the power to sue and be sued, enter into legal and contractual relationships, acquire property etc. One distinct feature of a corporation is its distinct legal personality which is different from its members.

What is meant by legal personality of a company?

To have legal personality means to be capable of having legal rights and duties within a certain legal system, such as to enter into contracts, sue, and be sued. Legal personality is a prerequisite to legal capacity, the ability of any legal person to amend rights and obligations.

What are the principles of separate legal personality?

A company, as a separate legal entity, continues to exist irrespective of changes to its membership. It owns its assets and is responsible for its own liabilities. A company’s separate legal personality exists for so long as it is registered.

What is the Turquand rule?

The common-law Turquand rule in South African law protects persons from being affected by a company’s non-compliance with an internal formality pertaining to the authority of its representatives.

Why is Salomon v Salomon important?

The landmark case of Salomon v A. Salomon and Company [1897] A.C. 22 saw the House of Lords firmly uphold the principle of separate corporate personality which has been the starting point for any discussion on the topic ever since. Mr Salomon controlled a boot-making business as a sole trader.

What are the concepts of legal personality?

3) Definition of legal personality Salmond says that a person is a being whom law regards to be capable of rights and duties. A juristic person may not be a human being necessarily it may be any other thing which law considers as a person. It confers a legal status which is able to possess rights and duties.

What are the consequences of legal personality?

Firstly, separate legal personality results in limited liability in the sense that the liability of shareholders for the company’s debt is limited to the amount that they have paid the company for its shares and cannot be held personally liable for the debts of the company.

What happened in Macaura v Northern Assurance?

Macaura v Northern Assurance. Mr Macaura sold all timber to a company (Irish Canadian Saw Mills Ltd) in which he and his nominees held all the shares. Subsequently Mr Macaura insured the timber against fire on policies in his own name. After two weeks, a fire broke out and he claimed the insurance.

Who is Mr Macaura and what did he do?

Mr Macaura was also an unsecured creditor for £19,000. He got insurance policies – but in his own name, not the company’s – with Northern Assurance covering for fire.

Does Mr Macaura have an insurable interest in the company?

The insurance company, Northern Assurance Co Ltd, argued that Mr Macaura did not have an insurable interest as a shareholder in the company. They argued that the company is a separate legal entity.

How did Mr Macaura insure the timber against fire?

Mr Macaura sold all timber to a company (Irish Canadian Saw Mills Ltd) in which he and his nominees held all the shares. Subsequently Mr Macaura insured the timber against fire on policies in his own name. After two weeks, a fire broke out and he claimed the insurance.