Adams V Cape Industries PLC (1990) Ch 433 Essay

Question:

Should the corporate veil be more porous? Discuss with particular reference to Adams v Cape Industries plc [1990] Ch 433 and recent English authority?

Answer:

The purpose of corporate veil is to distinguish a company as a legal person that has a separate identity from its shareholders. In this way, when the relevant test has been satisfied, willingness has been shown by the courts to pierce the corporate veil. On many occasions, the courts have to deal with the question if a company has to be considered as a separate legal entity in cases where the litigants are trying to recover from the opponents and it is found that the other party to the contract is a company that has no assets of its own but at the same time, such company is a part of larger group that has the assets from which the claimant can recover.

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