The Mythology of Salomon's Case and the Law Dealing with the Tort Liabilities of Corporate Groups: An Historical Perspective

(2014) 40 Monash University Law Review 452

36 Pages Posted: 14 May 2015

Date Written: May 13, 2015

Abstract

Salomon’s case has for a long time been widely seen as a landmark case that is the keystone of modern company law. A mythology has developed around the case that has resulted in the Salomon principle exercising an iron grip on company law. The rigid application of the principle in Salomon’s case to corporate groups has enabled corporate groups to structure themselves in ways that limit the tort liabilities of the group as a whole and so raises important social, economic and ethical questions regarding the allocation of risk that are not addressed by the application of the Salomon principle. This article suggests that given the importance of the social, economic and ethical issues raised in cases of mass torts that invariably involve corporate groups, it is preferable that these issues are resolved by tort law, which is concerned with the allocation of risk, thereby circumventing the dead hand of Salomon.

Keywords: corporations law, torts law, corporate groups, legal history

JEL Classification: K13, K22

Suggested Citation

Lipton, Phillip, The Mythology of Salomon's Case and the Law Dealing with the Tort Liabilities of Corporate Groups: An Historical Perspective (May 13, 2015). (2014) 40 Monash University Law Review 452, Available at SSRN: https://ssrn.com/abstract=2605733 or http://dx.doi.org/10.2139/ssrn.2605733

Phillip Lipton (Contact Author)

Monash University, Australia ( email )

Caulfield Campus
Sir John Monash Drive
Caulfield East, Victoria 3084
Australia

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