Salomon v A Salomon & Co Ltd · House of Lords · 1897

Must he pay the company's debts?

Short answer: No: the company is a separate person.

The facts. A London bootmaker turned his business into a company, holding nearly all the shares, with family members holding a few. The firm went broke. Creditors said the company was really just him, and he should pay.

The ruling. Salomon v A Salomon & Co (1897): The Lords unanimously held a company is a separate legal person, so creditors couldn't reach the owner personally.

This is the bedrock of company law worldwide. Lower courts had ruled against him, but the Lords reversed them. It's the source of limited liability as we know it.

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For fun, not legal advice.