The real credit for the development of human civilization goes to law and its
prohibitive provisions which apprised human beings of their rights and duties.
The primary aim of law is to protect human interests by regulating the conduct
of individuals in the society.
The term concept
broadly means, "an abstraction from particular things
or events etc, forming a general notion.
" Paton defines concepts as those
categorizations which are rigidly determined as a matter of law. Bodenheimer defined
legal concepts as working tools of judicial reasoning and art of doing justice
according to law. These include, right, duty, power, privilege, liability and
immunity and expound the relations between those notions. Benjamin N Cardozo observed
that, "Concepts are useful and indeed indispensable as their value is deeply
imbedded in our law and legal philosophy."
Law and Morality
In today's world, law and morality are considered to be unrelated fields and
when we use the term 'legal ethics', it refers to the professional honesty of
lawyers and judges and it has nothing to do with the 'wrongness
' or 'rightness
of any particular law.
Ethics or morals is the study of what we ought to do, which means what is the
right way to act and what is wrong in the eyes of law. Basic moral concepts like
right and wrong are universal in nature. If we treat them relatively and
subjectively, then they become inapplicable to the society. Generally speaking,
morality is the quality of being in accord with standards of right or wrong
There are basically three concepts in morality, namely, a moral identity, moral
standards with regard to behaviour and moral responsibility which refers to our
conscience. Morality is a very complicated issue in the multi-cultural society
we live in today. The primary aim of morality is to ensure the uprightness of
individual conscience. Individual morality refers to individuals in relation to
themselves and to an individual code of morality which may or may not be
recognised by any particular society or religion. Social morality is concerned
with the relationship of one human being with the other human beings. It is the
most important aspect of morality.
Views on the Concept of Law and Morality
According to Vinogradoff, "Law
is clearly distinguishable from morality. The object of law is the submission of
the individual to the will of organized society while the tendency of morality
is to subject the individual to the dictates of his own conscience."
According to Pollock, "Though much ground is common to both, the subject-matter
of law and ethics is not the same. The field of legal rules of conduct does not
coincide with that of moral rules and is not included in it and purposes for
which they exist are different."
According to Capitant, "Social organization rests equally on law and morals. The
precepts of both are obligatory; those of law are enforced by public authority;
those of morals are addressed only to the individual conscience."
According to Duguit,"Law has its basis in social conduct. Morals go an intrinsic
value of conduct. Hence, it is vain to talk about law and morals. The legal
criterion is not an ethical criterion."
According to Korkunov, "The distinction between morals and law can be formulated
very simply. Morality furnishes the criterion for the proper evaluation of our
interests; law marks out the limits within which they ought to be confined."
According to Longo,"Ethics is the common foundation. Morals regard man with
respect to his ultimate destiny; law regards him with respect to conditionally
good in an external social relation."
According to Paton, "Since law exists to harmonise the purpose of individuals,
law itself strives towards justice."
According to Pound, "Law and morals have a common origin, but they diverge in
According to Bentham, "In a word, law has just the same centre as morals, but it
has by no means the same circumference."
Relation between Law and Morality
Various jurists have given distinction between the concepts of law and morality
and according to them there is no relationship between the two. However, both
law and morality are very closely related to each other.
The relationship between law and morals depends on how a jurist defines law.
Historical, analytical, sociological and philosophical jurists have defined the
law according to their understanding and these definitions materially differ
from each other.
According to one definition which regards law as, "The command of the sovereign
would not make any concession for morals to have any place in law," but another
view which regards, "All the rules and principles which govern or influence
human conduct as law, allows morals to play a very important role in the field
A study of the relationships between law and morality can be made from three
- Morals as the basis of law.
- Morals as the test of 'positive' law.
- Morals as the end of law
There is a necessary interdependence between law and morality. Morals
distinguish right and wrong in human behaviour. Its primary aim is the personal
improvement and ultimately the attainment of salvation. However, the political
civil law is aimed at making it possible for people to live together in
community: in justice, peace and freedom. It creates the conditions for true
justice and truly human behaviour. Unless and until there is a right
relationship between law and morality, the existence of human civilization is
The Western nations witnessed the crisis which shakes its culture and
civilization, is the outcome of separating both law and morality, thus, seeing
no necessary relationship between them. Law is an enactment made by a sovereign
State which is backed by physical coercion and its breach is punishable by the
courts of law.
These enactments represent the will of the State and realises its purpose. Law
is also the reflection of political, social and economic relationships existing
in the society which determines the rights and duties of every citizen towards
one another and towards the State. Government fulfills its promises to the
people through various legal provisions. Law and morality are intimately related
to each other. Laws are based on the moral principles of society. Both law and
morality help in the regulating the conduct of the individual in society.
In order to make laws effective, they must represent the moral ideas of the
people. Good laws help in rousing the moral conscience of the people and create
and maintain such conditions which encourage the growth of morality. Laws
regarding spread of primary education are examples of this nature.
is as good A Treatise on Politics
as on ethics.
In ancient times, the term Dharma
represented both law and morality. Law
is not merely the command of the sovereign but it reflects the idea of right or
wrong based on the prevalent morality in the society. The obedience to law also
depends on the active support of the moral sentiments of the citizens. Laws
which are not supported by the moral conscience of the people are liable to
become null and void.
According to Green, "In attempting to enforce an unpopular law, a government may
be doing more harm than good by creating and spreading the habit of disobedience
to law. The total cost of such an attempt may well be greater than the social
Distinction between Law and Morality by Arndt
- In law, a man is considered as a person because he has a free will. In
morals, we have to do with determining the will towards the good,
- Law has to do with acts in so far as they operate externally. Morals
look into the intention-the inner determination and direction of the will.
- Law governs the will so far as it may be external coercion, whereas
morals seek a free self-determination towards the good.
- Law considers man only is so far as he lives in the community with
others. Morals give a guide to lead him even if he was alone.
Concept of Rights and Duties
In order to understand the concept of 'rights' and 'duties', it is important to
understand the meaning of the term 'legal concept
Meaning of Rights
In general terms, right means claims or titles, liberties, powers and immunities
summed together. In other sense, it is a permissible action within a certain
sphere. Word 'Right' has been derived from the Latin term rectus
According to Salmond, "Right is a man's capacity of influencing the acts of
another, not by his own strength, but of the opinion on the force of society."
According to Julious Stone, a 'right' connotes three thingy namely:
- A claim justifiable in words.
- An attitude of human being by virtue of some supposed ideal or natural
right of life, equality, property which is in accordance with natural law.
- The existence of right presupposes existence of a remedy for its breach,
which has been explained by the Lath maxim ubi jus ibi remedium,
Meaning of Duties
A duty is an obligatory act, i.e. it is an act, the opposite of which would be
considered wrong. Thus, duties and wrong are generally co-related. The
commission of a wrong is the breach of duty and the performance of a duty is
avoidance of wrong.
According to Keeton, "A duty is an act or forbearance compelled by the State in
respect of a right vested in another and the breach of which is wrong."
Duties can be classified as:
- Moral and
A duty may be moral but not legal or it may be legal but not moral or it may be
both moral and legal. The law enforces the performance of a legal duty or
punishes the disregard of it.
Classification of Legal DutiesPrimary and Secondary Duties
A duty may be either primary or secondary. A primary duty is one which exists
per se and is independent of any other duty. For example, to avoid causing
personal injury to another person is a primary duty. Whereas secondary duty is
one which has no independent existence and exists only for the enforcement of
other duties. For example, a duty to pay damages for causing the injury to a
person is a secondary duty. A secondary duty is also called a remedial or
Absolute and Relative Duties
According to Hibbert, there are two types of duties, absolute and relative
duties. Hibbert further states that, absolute duties are owed only to the State,
breach of which is generally called a crime and the remedy for it is punishment.
Whereas, relative duties are owed to any person other than the one who is
imposing them, the breach of which is called a civil injury, which is
redressible by compensation or restitution to the injured party. According
to Austin, certain duties are absolute, i.e. they do not have a corresponding
right. For example, duty towards God or State or a duty not to commit suicide is
absolute. A duty of kindness towards animals is also an absolute duty.
Positive and Negative Duties
A duty may be either positive or negative. When a law obliges a person to do an
act, the duty is called positive. When the law obliges a person to refrain from
doing an act, it is a negative duty. For example, if a person owes a debt to
another, he is under a duty to pay off the amount. This is his positive duty.
The performance of a positive duty extinguishes both right and duty. Example of
a negative duty is that, if a person has a right to a house, other people are
under a corresponding duty to not to interfere with that person's exclusive use
of house. Thus, a negative duty is not capable of being extinguished by
As per Salmond, right is defined as, "An interest recognised and protected by a
rule or justice. It is an interest in respect of which there is a duty and the
disregard of which is wrong." Many interests exist de facto and not de jure;
they receive no recognition or protection from any rule of right. In case of
their violation there is no wrong and respect for them is no duty.
As per John Austin, legal right is defined as, "A party has a right when another
or others are bound or obliged by law to do or forbear towards or in regard of
him". This definition has been criticised on the ground that it overlooks the
element of interest involved in conception of right.
John Stuart Mill has pointed out the "lacunae in Austin's definition of right by
an example. When a prisoner is sentenced to death the jailor is duty bound to
execute him. Then will it be proper to say (according to Austin) that the
convict has a right to be hanged."
TE Holland defined legal rights as, "A capacity residing in one man of
controlling with the assent and assistance of the State the actions of others".
He laid emphasis on the element of enforcement of legal rights while Salmond
laid greater emphasis on recognition of right.
Ihering defined right as a "Legally protected interest'. He considers law as a
means to an end.
Vinogradoff observed that, "Right is a range of action assigned to a particular
will within the social order established by law, a right, therefore supposes a
potential exercise of power in regard to things or persons, when a man claims
something as his right, he claims it as his own or as due to him."
According to JC Gray, "It is the force of the State which lends validity to a
legal right". According to him, "a legal right is that power which a man has to
make a person or persons do or refrain from doing a certain act or certain acts,
so far as the power arises from society imposing a legal duty upon a person or
persons." Duguit is against the view that the basis of a legal right is human
He argues that all laws originate from social solidarity hence there is no
existence of a right as such. Duguit believes that human will is opposed to
social good because it always leads to conflict of interests between
individuals. So there is no place for the concept of right in society. He
rejects the concept of right as immoral and against the interest of the
society. Kirchmann (German jurist) defined, "Right as a physical power, which
through the commands of authority, is not only morally strengthened, but also
can protect its power against a transgressor by the application of compulsion or
The High Court of Madras in Daniel vs. State (1968)
explained the main
attributes of a legal right, which are as follows:
In strict sense of the term, legal right is one which is an ascertainable claim
which is enforceable by courts and justice and by administration agencies. In
its wider sense, it has to be understood as any advantages or benefit conferred
upon a person by rule of law. Legal rights need to be recognised by law. There
are rights which are recognised by the International Court under the law of
nations. Truly speaking, a legal right is a capacity of asserting a recognised
interest rather than a claim that could be asserted in the law court.
Theories of Legal Rights
Primarily, there are three main theories regarding the nature of legal rights.
They are as follows:
Hegel, Kant, Hume and others supported the will theory of legal rights.
According to this theory, a right is an inherent attribute of the human will.
This theory further suggests that it is through a right that a man expresses his
will over an object. The theory has also been accepted and supported by the
German historical jurists. According to Puchta, "A legal right is a power over
an object which by means of his right can be subjected to the will of the person
enjoying the right." Vinogradoff considers that psychology of asserting claim is
the basis of legal right.
According to Austin, right of a person means that others are obliged to do or
forbear from doing something in relation to him. Austin's concept of right is
based on sovereign power of the State. According to him duty is an obligation
the breach of which is punishable because of the penal sanction attached with
it. According to Duguit, will is not an essential element of a legal right or
law. The real basis of law is solidarity.
Interest theory of legal right was propounded by the German jurist Ihering.
According to this theory, "a legal right is a legally protected interest."
Ihering does not emphasise on the element of will in a legal right. According to
him, the basis of legal right is 'interest' and not will. The primary aim of law
is protection of human interests and to avert a conflict between their
Salmond criticised Ihering's theory on the ground that it is incomplete as it
completely overlooks the element of recognition by State. A legal right should
not only be protected by the State, but should also be legally recognised by it.
JC Gray supported Salmond's view about legal right. According to him (Gray),
interest theory was only partly true. He emphasised that a legal right is not an
interest in itself but it is only a means to extend protection to interests.
According to him, legal right is that power by which a man makes other persons
do or refrain from doing a certain act by imposing a legal duty upon them
through the agency of law (State).
This theory completely denies the existence of legal rights. They argue that
State being omnipotent, individual has no separate existence from it. In fact
all rights belong to the State and the individuals do not have any independent
legal rights as such. However, this view has been rejected being far from
reality in the modern context of democratic welfare States.
Essential Elements of Legal RightsSalmond categorised five important elements or characteristics of every legal
right, which are as follows:
Classification of Legal Rights
Various jurists have classified legal rights in different ways. Rights may be
classified as follows:
Positive and Negative Rights
- The Person of Inherence: He is also called the subject of right. A legal
right is always vested in a person who may be distinguished as the owner of
the right, the subject of it or the person of inherence. So there cannot be
a legal right without a subject or a person who owns it. The owner of the
right need not be certain or determinate. For example, an unborn child
possesses a legal right although it is not certain whether he would be born
alive or not.
- The Person of Incidence: A legal right avails against a person upon who
lays the co-relative duty. He is distinguished as the 'person of incidence'.
He is a person bound by the duty and so may be described as 'subject of the
duty'. In other words, the person whose duty is to act or forbear for the
benefit of the subject of the right.
- Content of the Right: The act or omission which is obligatory on the
person bound in favour of the person entitled. This is called the content or
substance of right.
- Subject-matter of Right: It is something to which the act or omission
relates, i.e. the object over which a right is exercised. This may be called
the object or subject-matter of the right.
- Title of the Right: Every legal right has a title, i.e. certain facts or
events which are events by reason of which the right has become vested in
Positive and negative rights can be clearly understood through following points:
- A positive right corresponds to a positive duty, whereas a negative
right corresponds to a negative duty.
- A positive right involves a positive act while a negative right involves
some kind of forbearance or not doing.
- A positive right entitles the owner of it to an alteration of the
present position to his advantage, whereas a negative right seeks to
maintain the present position of things.
- A positive right aims at some positive benefits but a negative right
aims at not to be harmed.
- A positive right requires an active involvement of others but a negative
right requires only passive acquiescence of other persons.
- A positive right has a mediate and indirect relation to the object while
a negative right is immediately related to the object.
Perfect and Imperfect Rights
Salmond, states that a perfect right is one which corresponds to a perfect duty.
It is not only recognised by law but also enforced by it. An imperfect right, on
the other hand, is one which though recognised, is not enforceable by law. A
perfect right is one in respect of which an action can be brought in a court of
law and the decree of the court, if necessary enforced against the defaulting
judgment debtor. But an imperfect right is incapable of legal enforcement.
Right in Rem or in Personam
A real right (right in rem) corresponds to a duty imposed upon persons in
general whereas a personal right (right in personam) corresponds to a duty
imposed upon determinate individuals. In other words, a real right is available
against the world at large while a personal right is available against a
particular person or persons. It is important to note that almost all real
rights are negative and most of the personal rights are positive, though, in a
few exceptional cases a personal right may also be negative.
Antecedent and Remedial Rights
An antecedent right is one which exists irrespective of any wrong having been
committed. It is an exceptional advantage granted to the person who is clothed
with this right. For example, purchaser of certain goods has an antecedent right
over the goods so purchased. However, a right which accrues when an antecedent
right is violated is called a remedial right e.g. compensation. Antecedent right
may be either a right in rem or right in personam.
Proprietary and Personal Rights
The rights of a person concerning his property are called proprietary rights.
The rights in regard to a person's status are called personal rights. Thus, a
person's proprietary rights constitute his estate, his assets. A person has
proprietary rights in his house, car, land etc. Proprietary rights are those
which have an economic significance or value while rights of status on the other
hand, are personal rights as no primary value can be set upon them.
Rights in Re Propria and Rights in Re Aliena
Literal meaning of right in re propria is right over one's own property and
right in re aliena means right over the property of someone else. The latter may
also be called as encumbrances using the term in its widest sense.
The most absolute power which the law gives over a thing is called the right of
dominium. This is a real right in a thing which is one's own and is called right
in re propria. According to Salmond, there are four kinds of encumbrances,
Principal and Accessory Rights
A principal right is the main or primary right vested in a person. A
supplementary right is one which is appurtenant to principal right and called
the accessory right. Thus, accessory right is a supplementary right which is
added to or arises out of the principal rights. The legal maxim is "accessorium
sequitur principal', i.e. the accessory right follows the principal. Thus, rent
and covenants of a lease is accessory to landlord's ownership of the property.
Legal and Equitable Rights
In England, there were formerly two system of law. One system of law was
administered by common law and rights which were recognised by the courts of
common law were known as legal rights. The other system of law was administered
by the Court of Chancery and right recognised by this court were known as
Equitable rights. The Judicature Act of 1878 led to the fusion of law and equity
but distinction still remains in as much as the Act has not abolished anyone of
the two system, but has made these consistent with each other by throwing
overboard those rules of common law, which were inconsistent with the rules of
Vested and Contingent Rights
A vested right accrues when all the facts have occurred which must by law occur
in order that a person in question would have the right. In case of contingent
right, only some of the events necessary to vest the right in the contingent
owner have happened. A vested right creates an immediate interest. It is
transferable and heritable. A contingent right does not create an immediate
interest and it can be defeated when the required facts have not occurred.
The word 'person'
is derived from the Latin word 'persona' which meant a mask
worn by actors playing different roles in a drama. A person is generally defined
as being a subject or bearer of a right. But this is rather a too narrow
interpretation of the term as a person is subject to duties as well. There are
two types of person which the law recognizes, namely, natural and artificial.
The former refers to human beings while latter to other than human beings whom
the law recognised as having duties and rights. One of the most recognised
artificial person is corporation.
Many authors have restricted the use of term 'personality' to human beings alone
because it is only they who can be subject matter of rights and duties and
therefore, of legal or juristic personality. However, it is important to state
that the term has a far wider connotation in law and includes Gods, angles,
idols, corporations etc., although they are not human beings. In contrast to
this, there may be living persons such as slaves, who are not treated as
'person' in law because they were not capable of having rights and duties.
Similarly, in Hindu law, an ascetic (sanyasi) who has renounced the world ceases
to have any proprietary rights and his entire estate is passed on to his heirs
and successors and his legal personality is completely lost.
Definitions of Legal Person
The German jurist Zitelmana considers 'will' as the essence of legal
personality. According to him, "Personality is the legal capacity of will, the
bodiliness of men for their personality a wholly irrelevant attribute."
According to GW Paton, "Legal personality is a medium through which some units
are created in whom rights can be vested."
Salmond defines a 'person' as, "Any being to whom the law regards as capable of
rights or duties. Any being that is so capable, is a person whether human being
or not and nothing that is not so capable is a person even though he be a man."
Gray defines a 'person' as "Entity to which rights and duties may be
attributed". Any being that is capable of holding a right or duty, whether it be
a human being or not, is 'person' in law.
Juristic persons may be defined as things, mass of property or an institution
upon whom the law confers a legal status and who in the eyes of law possess
rights, liabilities and duties as a natural person. A person may be a legal
person without being a human being. For example, in Hindu law, an idol is a
legal person. Legal personality is a juristic device by which law confers
certain powers and capacities on artificial persons.
Nature of Corporate Personality
Corporate personality is a creation of law. Legal personality of corporation is
recognised both in English and Indian law. A corporation is an artificial person
enjoying in law, a capacity to have rights and duties and holding property. The
individuals forming the corpus of the corporation are called its members.
Juristic personality of corporations pre-supposes the existence of three
Firstly, there must be a group or body of human beings associated
for a certain purpose.
Secondly, there must be organs through which the
corporations functions and
thirdly, the corporation is attributed will (animus)
by legal fiction. It is important to note that a corporation is distinct from
its individual members.
It has the legal personality of its own and it can sue
and be sued in its own name. It does not come to end with the death of its
individual members and therefore, has a perpetual existence. A corporation can
act only through its agents. Law provides special procedure for the winding up
of a corporate body. Besides, corporations the banks, railways, universities
colleges, church, temples, hospitals etc, are also conferred legal personality,
The Union of India and the States are also recognised as legal or juristic
Characteristics of an Artificial PersonArtificial person differs from those of a group of natural persons or from a
single natural person in the following aspects:
- Artificial person is not merely the sum of total of its component
members, but something superadded to them, it may continue to remain
although one or all of them are changed.
- Its claim and liabilities are its own, not of its constituent members.
- The property which it may hold does not belong to the members either
individually or collectively.
- Its agent, though appointed by a majority of the members, does not
Position of Corporate Personality in India
The concept of corporate personality is well recognised under the Indian law.
The position of the Karta in a Hindu coparcenary is an illustration on the
point. In coparcenary system although each member of the joint Hindu family has
some rights and duties, but the karta is overall head of the joint family who
manages the entire family property.
He has right to alienate the property and
other members of the family are under his control. He can sue and be sued on
behalf of the joint family. In juristic terms, he is a corporation sole having a
double capacity, i.e. as a natural person, he is the eldest member of the family
and as a legal person, he is in the capacity of the karta of the joint family.
The Union of India and the States have also been recognised as corporate
entities under Article 300 of the Constitution of India. The Ministers of the
Union or State Governments are not legal or constitutional entity and therefore,
they are not corporation sole.
The reason being that they are appointed by the President or the Governors and
' within the meaning of Articles 53 and 154 of the Constitution.
They are not personally liable for their acts or omissions nor are they directly
liable in a court of law for their official acts.
The Reserve Bank of India has a corporate existence because it is an
incorporated body having an independent existence. But the Union Public Service
Commission and a Joint Hindu family are not recognised as legal persons because
both these cannot hold property in their own names and can neither sue nor be
sued in a Court of Law.
A partnership firm is not a corporate entity and therefore, it can neither sue
nor be sued in its own name. The member partners cannot contract with their
partnership firm because a man cannot contract with himself.
Types of Corporation
There are two types of corporation, namely, corporation sole and corporation
A corporation sole is some recognised official person that is filled by one
human person who is replaced from time to time e.g. the Crown, the Postmaster
General, the Attorney General, the Advocate General. The main purpose of the
corporation sole is to ensure continuity of an office.
As observed by Salmond, in case of corporation sole, under each of the above
names two persons live. One is a human being administering for the time being.
The other being is the office which is never extinguished or vacated.
A corporation aggregate consists of a number of human persons. It has an
existence, independent of the existence of its members.
According to Salmond, "A corporation aggregate is an incorporated group of
co-existing persons and corporation sole is an incorporated series of successive
Advantages of Corporation
According to Keeton, the advantages are as follows:
- It simplifies the legal procedure, which enables the persons to sue a
single incorporated body rather than numerous individuals. The corporation,
on its part, can also sue as a single legal entity.
- The financial liability of shareholders is limited only to the extent of
their share holding and not beyond it.
- The death or withdrawal of a member or members does not disturb the
existence of an incorporated body. The members may come and go, but the
corporation continues perpetually forever.
- An incorporated body being a legal entity, can freely dispose of its
property in its own name. Its property is clearly distinguishable from that
of the shareholder's property.
Liability of Corporation
A corporation can do only those things which are incidental to the fulfillment
of the purposes for which it has been created under the law. All its acts must
be directed to its legally appointed end. Thus, a company incorporated by
special statute is limited to the powers conferred by the statute and those
which are reasonably incidental thereto.
The purpose and objects of a company registered under the companies Act, 1956
are contained in its Memorandum of Association and the company cannot go beyond
the limits so laid down for its activities.
A corporation cannot personally commit a tort. It is an artificial person having
no brain and body of its own. It may, however, be held liable for the wrongful
acts committed by its agents or servants during the course of their employment.
This liability is based on the principle of vicarious liability. The company is
therefore, liable for the torts of its employees and agents just as a master is
held liable for the wrongful and negligent acts of his servants.
In case of misrepresentation in the prospectus of the company, the company and
its every director, promoter and every other person who authorises, issue of
such prospectus, incurs civil liability towards those who subscribe for shares
on the faith of untrue statement in the prospectus. It is now well settled that
a corporation may be sued for malicious prosecution or deceit or defamation
which involves malice as an essential ingredient.
A corporation is, however, not liable if the acts of its employee or servant or
agent is not authorised by the article of its association. The case of Poulton
vs. London and SW Rly Company, is a leading decision on the point.
A corporation cannot be held criminally liable for the criminal acts of its
employees on the principle of vicarious liability.
According to Salmond, "To punish a body corporate, either criminally or by the
enforcement of penal redress, is in reality to punish the beneficiaries on whose
behalf its property is held for the acts of the agents by whom it fulfills its
functions." Due to this reason, criminal liability of corporation is of
However, this orthodox view has been abandoned now and a corporation can be held
criminally liable for the criminal acts done by its representatives. A
corporation may incur criminal liability in cases involving malice, fraud or
other Maitland holds that a corporation has a real existence and therefore, has
its own will which is different from the will of its members. Relying the
realist theory of corporate personality, he attributes criminal liability on
corporation for malicious prosecution or libel or fraud.
Theories of Corporate PersonalityThere are five theories of corporate personality, they are as follows:
Fiction TheoryThe main exponents of this theory were Salmond, Savigny, Coke, Blackstone and
Holland. According to this theory, a corporation is clothed with a legal
personality. The personality of a corporation is different from that of its
Savigny regarded corporation as an exclusive creation of law having no existence
apart from its individual members who form the corporate group and whose acts by
fiction, are attributed to the corporate entity.
Savigny further pointed out that there is a double fiction in case of a
corporation. By one fiction, the corporation is given a legal entity, by another
it is clothed with the will of an individual. Thus, fictitious personality of a
corporation has also a will of its own which is different from that of its
Kelson also regards legal personality a fiction. In his words, "it is convenient
peg upon which to hang legal rights and duties. Thus, a group of persons or
a successive series of persons is a legal person because it has an imaginary
personality by the fiction of law."
Salmond also supports the view that a corporation has a fictitious existence. It
is distinct from its members and capable of surviving even after all the members
have ceased to exist. A company incorporated by an Act of Parliament can only be
dissolved by another such Act.
Gray justifies fiction theory on the ground that the main object of corporation
is to protect the interest of persons having common objectives. Like fictitious
personality, the will of the corporation is also as imaginary creation of law.
According to Wolf, fiction theory is more realistic and makes it easier to
disregard juristic personality where it is desirable. The theory is concerned
with sovereignty of state. It presupposes that corporation as a legal person ha,
great importance because it is recognised by State and Law.
Realist TheoryThis theory was founded by the noted German jurig Johannes Althusius and its
main propounder was Gierke who believed that every collective group has a real
mind, real will and a real power of action.
A corporation, therefore, has a real existence, irrespective of the fact whether
it is recognised by the State or not. The corporate will of the corporation
finds expression through the acts of its directors, employees or agents. The
existence of a corporation is real and not based on any fiction. He further said
that law has no power to create an entity but merely has a right to recognise or
not to recognise an entity. Thus, this theory was favoured more by sociologists
rather than legalists.
The propounder of this theory claimed that fiction theory has failed to identify
the relationship of law with society in general. Fascists have made use of the
realist theory of corporate personality to support the omnipotence of the State.
The theory opposes the contention of the concession theory that personality is
attributed by the State.
Some other jurists like Beseler Miraglia, Bluntschli have also supported the
realist theory. In England, it was supported by Pollock, Maitland and Dr Jethro
Brown. Dicey also contends that the personality of a group is a reflection of
its consciousness and will.
The main difference between fiction theory and realist theory lies in the fact
that the former denies that corporate personality has any existence beyond what
the State chooses to give it, the latter holds that a corporation is a
representation of physical realities which the law recognises.
Bracket TheoryThis theory is also called as Symbolist theory. It is associated with the well
known German jurist Rudolph K. Ihering.
According to this theory, juristic personality is only a symbol to facilitate
the working of the corporate bodies. Only the members of the corporation (human
beings) are 'persons' in real sense and a bracket is put around them to indicate
that they are to be treated as one single unit when they form themselves into a
The American jurist Hohfeld has advocated this theory in 3 different forms.
According to him, corporate personality is the creation of arbitrary legal rules
designed to facilitate proceedings by and against an incorporated body in law
This theory is similar to the concept of lifting the corporate veil. The
supporters of this theory believed that juristic personality is only a symbol to
formulate the working of corporate bodies. Hohfeld has supported this theory on
the ground that only human beings are persons and juristic personality is mere
creation of arbitrary rules of procedure.
Bracket theory is basically similar to fiction theory in the sense that it
recognises that only human beings have interests and rights of a legal person.
It is clearly in line with the theory of lifting the corporate veil. However,
this theory has been criticised on the ground that it does not indicate as to
when the bracket may be removed and the corporate mask be lifted for taking not
of the members who constitute the corporation.
Concession TheoryThis theory is basically linked with the philosophy of sovereign state. It
pre-supposes that corporation as a legal person has great importance because it
is recognised by the State or the law.
According to this theory, juristic personality is a concession granted to
corporations by the State. It is entirely at the discretion of the State to
recognise or not to recognise a juristic person.
This theory closely resembles the fiction theory as it also believes that there
is no juristic personality apart from the creation of law. This theory differs
from the fiction theory in as much as it emphasises on the discretionary power
of the State in the matter of recognising the corporate personality of the
Some critics consider this theory dangerous because of its over-emphasis on
State discretion in the matter of recognising corporation which are non-living
entities. In their view, this may lead to dictatorship and arbitrary
restrictions on corporate bodies, particularly the political entities.
Purpose TheoryThe main exponent of this theory was the noted German jurist Brinz. Barker
developed this theory in England. EI Bekker, Aloys and Demilius were supporters
of this theory. This theory is founded on the view that corporations are treated
as 'persons' for certain specific purposes.
The assumption that only living persons can be the subject matter of rights and
duties, would have deprived imposition of rights and duties on corporations
which are non-living entities. It therefore, became necessary to attribute
'personality' to corporation for the purpose of being capable of having rights
The origin of purpose theory is to be traced back to Stiftung of German law,
i.e. 'foundations' which were treated as juristic persons.
A foundation is analogous to a trust for specific charitable purpose such as
propagation of education, grant of scholarships etc. These foundations were
attributed juristic personality in Germany in order to facilitate legal
transactions. The Stiftung being a kind of charitable fund, was not a real
person therefore, it was personified for the specific purpose for which it was