Students’ name:

 Breneș Ioan-Alexandru
 Iov Mircea
 Fofircă Ionuț
 Boricean Ovidiu
 Greculescu Mihai-Cosmin

Legal Person
Abstract
A legal person is a human or a non-human legal entity that is treated as a person for legal
purposes. A legal person is capable of engaging in all usual legal business that a real person can
participate in, such as suing, being sued, owning property, and entering into contracts.

The concept of legal personhood is especially popular in business law, where business
organizations like corporations, partnerships, and limited liability companies possess legal
personhood. As a result, these statutorily created entities are able to be treated as legally distinct
from their shareholders and officers.

A legal person may also be referred to as a fictitious person or an artificial person.

Key-words: business, corporations

Introduction

1.History

The concept of legal personhood for organizations of people is at least as old as Ancient
Rome: a variety of collegial institutions enjoyed the benefit under Roman law.
 The doctrine has been attributed to Pope Innocent IV, who seems at least to have helped
spread the idea of persona ficta as it is called in Latin. In canon law, the doctrine of persona ficta
allowed monasteries to have a legal existence that was apart from the monks, simplifying the
difficulty in balancing the need for such groups to have infrastructure .Another effect of this was
that, as a fictional person, a monastery could not be held guilty of delict due to not having a soul,
helping to protect the organization from non-contractual obligations to surrounding communities.
This effectively moved such liability to persons acting within the organization while protecting
the structure itself, since persons were considered to have a soul and therefore capable of
negligence and able to be excommunicated.

2.Who or What can become a legal person?

As everyone may think, a legal person can be related only to a human or a group of
humans that have different benefits and obligations under the law. Well, this is right, almost. In
New Zeeland, there is a river named Whanganui. The Whanganui River in New Zealand has
supposedly become a legal person according to an agreement between the Whanganui Iwi (the
Whanganui tribes) and the Crown, which was passed into law in 2017. The Whanganui Iwi
believe the river is a living being, called Te Awa Tupua, “an indivisible whole incorporating its
tributaries and all its physical and metaphysical elements from the mountains to the sea”. The
very idea of extending legal personhood to nonhumans or animals is likely unthinkable for many
jurists. However, there is also a strand of jurisprudence which goes much further; legal
personhood is here understood as an almost infinitely flexible concept with regard to its
application. Cases such as those of the Whanganui River as examples in support of the
proposition that legal personhood can be extended to just about anything, or at least to a very
large number of entities. The ultimate example according to this strand of thought is of course
the corporation: a legal person without a physical form, existing purely in the “contemplation of
law”.
 The Whanganui River

3. What is the difference between legal person and natural person?

A natural person is any living human being considered as a subject of rights and
obligations.
It can be recognised by several elements:
 a family name
 a first name (or several)
 a home address
 a nationality (or several)
A natural person has a legal personality, which means that he or she has rights (e.g.
voting rights) and duties (e.g. respect for others).
 A legal person is a group with legal personality. Usually, a legal person consists of a
group of natural persons gathered to accomplish something in common. This group may also
include individuals and legal entities.

4. Advantages of a legal person

I. Independent legal existence
The entity has its own legal rights and obligations, separate to those running and/or owning
the entity.

II. Limited Liability of Company’s Members

One of the chief advantages of incorporation is the privilege of limited liability. The
company being a separate person, is the owner of its assets and is bound by its liabilities. Where
the subscribers exercise the choice of registering the company with limited liability, the
member’s liability becomes limited or restricted to the nominal value of the shares taken by them
or the amount guaranteed by them. No member is bound to contribute anything more than the
amount of shares held by them.

III. Perpetual Succession

A company is described as an artificial person in contrast to natural person. The expression
“artificial person” connotes that it is not subject to death or to ills as a natural person. An
incorporated person never dies. It is an entity with perpetual succession. A company does not
have an allotted span of life and no physical or mental illness can affect its life. Even the death of
a member of company does not affect its span of life.

Thus it is said that a company is like a flowing river, which is a running stream of water
known by a certain name, though some changes take place but its very existence is not destroyed
as an incorporated company. Therefore, existence of a company persists irrespective of the
change in the composition of the membership of the company.
IV. Separate Property

A company is a separate entity from its members constituting it. It is distinct person from the
members forming it. Thus the money and property of the company is not the property of its
members (shareholders).

V. Capacity to Sue and to be Sued

A company being a corporate or juristic person, can sue or can be sued in its own name. To
constitute such suit, the company must be represented by natural person. The complaint by the
company is liable to be dismissed because of the absence of the representative in the same way
in which an individual complaint is liable to be dismissed for absence of the complainant.

VI. Corporate Finances

The company is the only medium of organising business which is given the privilege of
raising capital by public subscriptions either by way of shares or debentures. Generally, an
incorporated company comes into existence on capital raised by public subscriptions either from
shares or debentures. Now-a days even public financial institutions render assistance in raising
capital. It is considered an exclusive privilege of companies. The facility of borrowing and
giving security by way of a ‘floating charge’ is also an exclusive privilege of companies.

5. Disadvantages of a legal person

I. Lifting of corporate veil

A corporation being a non-natural person, wears the mask of juristic person, acts through
its members called body corporate. These members acts on behalf of company and are immune
from any personal liability or responsibility. A company and its members are two separate entity.
They are separated through a veil, known as corporate veil. The chief advantage of incorporation
from which all other follows is the separate legal entity of the company.

In reality, however, the business of a legal person is always carried on by, and for
benefits of some individuals. In the ultimate analysis, some human beings are the real
beneficiaries of the corporate advantages.

II. Expenses and Cumbersome Formalities

Incorporation is very expensive and is subject to cumbersome formalities. This is treated

as another disadvantages of incorporation. In case of incorporation of a company a number of
documentation and formalities are required to be complied with, as per the provisions of the
Companies Act.

6. Webography

 https://academic.oup.com/book/35026/chapter/298855964
 https://thebaccalaureus.wordpress.com/2020/07/16/nature-characteristics-advantages-
and-disadvantages-of-a-corporate-personality/
 https://www.law.cornell.edu/wex/legal_person
 https://www.visitruapehu.com/explore-the-region/whanganui-river
 https://help.qonto.com/en/articles/5231586-what-is-the-difference-between-a-physical-
person-and-a-legal-entity