On Jan 29, 2008, at 8:19 PM, Gautam John wrote:
On Jan 30, 2008 8:20 AM, Lawnun <[EMAIL PROTECTED]> wrote:
I'm not entirely sure about your second statement re: corporate
personhood
being the basis of business
I'd imagined that the separation of individual liability from that of
the company was *the* reason it became, IMHO, the basis of business,
so to speak.
Corporate structures are a legal convenience that becomes necessary as
a practical matter when business structures become large enough that
it would be nearly impossible to adjudicate responsibility for actions
in a tort when said responsibility is literally distributed among many
thousands of individuals. There are benefits for individuals in both
directions. The low-ranking employee is not personally liable for
failures largely beyond their control, and other people have an entity
to sue where the potential return justifies the overhead cost of the
lawsuit.
The officers of a corporation are still personally liable for the most
part in many countries, which is one of the reasons they are
compensated so highly as dealing with random lawsuits -- frivolous or
not -- is part of their job.
There are a couple well-known exceptions. The American insurance and
financial services giant USAA is organized under an archaic and
obscure Texas cooperative structure that not only did not operate as a
corporation but where the *customers* of USAA were individually liable
for lawsuits against USAA. Texas changed the law a few years back to
protect the customers in this structure; USAA is routinely rated as
the best insurance company in the US by many metrics, but I think the
customers would have been shocked to discover that under the archaic
Texas laws it was formed under they could be held personally liable to
cover lawsuits against the entity.
So to answer the question corporations make large-scale business
practical from a legal standpoint. Treating an organization with
100,000 employees as a group of 100,000 individuals for all external
legal situations is problematic. A few centuries ago business was not
of a scale where this mattered generally.
Cheers,
J. Andrew Rogers
