Lifting the Corporate Veil

Document Type:Essay

Subject Area:Law

Document 1

The courts apply the principle of lifting the corporate veil that was established in Salomon v Salomon1 where it is evident that the veil could be used to shield fraud. Courts would not watch and see the corporate veil used to advance fraud or cloak misconducts. The concept of piercing the corporate veil was applied in Jones v Lipman2, where the defendant contracted to sell his personal property (a piece of land). The defendant, Lipman, decided to change his mind and in an attempt to evade a demand for specific performance, he transferred the personal property to a corporate. Russel LJ was of the view that the body corporate where the defendant masqueraded to transfer property was just a mask that Lipman wore in face to avoid being recognized by the eyes of equity.

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