The rule in Salomon v Salomon & Co [1897] AC 22 has been described as Essay - 2

The rule in Salomon v Salomon & Co [1897] AC 22 has been described as one of the corner stones of English Company Law - Essay Example This article will examine the rationale of the decision and its impacts towards the development of company law. The status of limited liability went to specific companies before 1825 through the provisions of express available in the Royal Charter regarding Incorporation. Section 2 of the Bubble Act of 1825 governed the first efforts in officially, introducing the concept of limited liability to the English laws. The section provided that the shareholders of a particular corporation would personally be liable in their own persons as well as their property to that extent as well as subject to the regulations and limitations as his magnificence. Although there was no opposition from the Crown to the idea of legal personality, public pressure turned in opposing any extension of legal personality that later became troubled with the stance of creditors. This provoked public suspicions because of the expectation that the Bubble Act would lead to an increase in the number of licensed companies with limited liability. This therefore was the reason for the withholding of the doctrine of limited liabil ity from Company Act in 1844 (Ferran 1999). However, public opinion moved in the reverse direction in favour of the principle of limited liability. In the 1850s, the doctrine acquired recognition in the law. In the year 1852, the Court of Exchequer chamber in the case of Hallet versus Dowdall accredited the legality of the clause of limited liability of 1952. This in turn prompted the parliament to pass the Limited Liability Act in 1855 as well as more contemporary act of Joint Stock Companies of 1856. Consequently, this led to the enactment of the Companies Act in 1862, which formed the foundation for the delivery of the rule in Salomon. The intention of the House of Lords in the Salomon rule was to send a clear message to the members of the public