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Important Concepts Of Law, Morality, Right and Duties, Legal Personality And Theories

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.

Morality

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 behaviour.

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 their development."

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 of law."

A study of the relationships between law and morality can be made from three angles, namely:

  1. Morals as the basis of law.
  2. Morals as the test of 'positive' law.
  3. 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 not possible.

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.

Plato's Republic 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 gain,"

Distinction between Law and Morality by Arndt

  1. 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,
  2. 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.
  3. Law governs the will so far as it may be external coercion, whereas morals seek a free self-determination towards the good.
  4. 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 which means correct.

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:
  1. A claim justifiable in words.
  2. 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.
  3. 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:
  1. Moral and
  2. Legal
    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 Duties

Primary 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 sanctioning duty.

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 fulfillment.

Legal Rights
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 will.

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 evil."

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:

Will Theory

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

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 individual interests.

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).

Protection Theory

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 Rights

Salmond categorised five important elements or characteristics of every legal right, which are as follows:
  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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 its owner.

Classification of Legal Rights
Various jurists have classified legal rights in different ways. Rights may be classified as follows:
Positive and Negative Rights
Positive and negative rights can be clearly understood through following points:
  1. A positive right corresponds to a positive duty, whereas a negative right corresponds to a negative duty.
  2. A positive right involves a positive act while a negative right involves some kind of forbearance or not doing.
  3. 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.
  4. A positive right aims at some positive benefits but a negative right aims at not to be harmed.
  5. A positive right requires an active involvement of others but a negative right requires only passive acquiescence of other persons.
  6. 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, namely:
  1. lease
  2. servitude
  3. security
  4. trust.

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 equity.

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.

Legal Personality
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 conditions.

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 persons.

Characteristics of an Artificial Person

Artificial person differs from those of a group of natural persons or from a single natural person in the following aspects:
  1. 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.
  2. Its claim and liabilities are its own, not of its constituent members.
  3. The property which it may hold does not belong to the members either individually or collectively.
  4. Its agent, though appointed by a majority of the members, does not represent them.

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 are 'officers' 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 aggregate.

Corporation Sole

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.

Corporation Aggregate

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 person."

Advantages of Corporation

According to Keeton, the advantages are as follows:

  1. 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.
  2. The financial liability of shareholders is limited only to the extent of their share holding and not beyond it.
  3. 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.
  4. 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.

Civil Liability

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.

Criminal Liability

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 exceptional nature.

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 Personality

There are five theories of corporate personality, they are as follows:
  1. Fiction Theory

    The 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 members.

    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 members.

    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.
     
  2. Realist Theory

    This 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.
     
  3. Bracket Theory

    This 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 corporation.

    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 court.

    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.
     
  4. Concession Theory

    This 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 corporation.

    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.
     
  5. Purpose Theory

    The 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 and duties.

    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 created.

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