Welcome back to Law Talkin’ Guy. Today’s topic is the first in
a series on one of our favorite people, the noble corporation. I jest, but only slightly. Corporations are not: (a) inherently good or evil; (b) the same as human beings; and (c) merely a collection of like-minded individuals acting in financial sync.
A corporation is a distinct unique entity, given legal life by its human creators with the express permission of the state, provided rules are followed and fees are paid. Among the various features of a corporation, one stands tallest: shifting liability from the corporation’s owners to the corporation itself. One cannot overstate the significance of eliminating personal liability. If the corporation profited, the owners profited. If the corporation fails, the owners likely lose their investment, but nothing more. In a failing partnership, the owners can lose their personal assets to creditors. It would be like if Trump had to declare bankrutpcy with his own money! The horror, the horror.
Trump aside, the lack of personal liability is of fundamental importance, and our world would be far different without it. Would mass air travel exist if the airline’s owners were personally liable for plane crashes and the like? Would companies be able to employ a workforce in the thousands, and greater? The list of risks that folks were able to take is endless. Of course, to point (a), not all of these “advances” are “good.” That depends on what the corporation’s controllers choose to do, and what the law allows. However the purpose of this post is legal education. I’ll leave morality for a different day.