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Corporate Personhood

What does it mean for a corporation to be a legal person? Professor Julia Mahoney explains that this term merely indicates that a corporate entity exists apart from the human people attached to it. Staff can be fired, managers can retire or be replaced but the company continues to operate. The corporation itself can enter into arrangements like contracts, and sue or be sued by other companies or individuals. https://youtube.com/watch?v=kvnGE6z8qKY


It sounds a bit peculiar to say that a corporation is a person, but this is often true in law, that words that have meaning outside law have a related but distinct meaning in law. A corporation being a person is a great example of how an everyday term can have a technical meaning when we discuss law. So when we say a corporation is a person, what we mean is that a corporation is a separate entity that has an existence independent from any of the actual living individuals that have anything to do with that corporation. A corporation is a separate person that sues as the corporation or is sued as the corporation, distributes dividends as the corporation, and so forth. Now there are a lot of living, breathing individuals, of course, associated with corporations. Corporations can't exist without ... Let's just call them actual people. So the board of directors consists of actual people. The shareholders are sometimes actual people, but sometimes other corporations or trusts or other entities that have a separate existence. The workers of course are actual people, and the managers of the corporation are actual people. So just bear in mind, whenever you hear this phrase, corporations are people, that all that means is that corporations are separate, distinct entities with a recognized legal existence that is different from any other entity out there. It doesn't mean that the law's confused about who actually has a human body and who doesn't have a human body. There's no confusion whatsoever on this score. It might be better to have a different term. I think the phrase, "Corporations are people," or the claim that a corporation is a person for certain purposes, I think that does cause a lot of confusion. If we were starting from scratch, I would recommend finding another term. But we've been saying that corporations are people, that a corporation is a person, for quite a while now. It's very much embedded in the law, and it's probably, at this point anyway, simpler simply to recognize that corporations are different from actual living, breathing people, and that all we mean when we say that a corporation is a person is that the corporation is a person for a very limited, distinct set of legal purposes. That distinct set of legal purposes is the corporation has a separate identity, such that it can sue and be sued. The shareholders are not responsible for the corporation's debts any more than that corporation is responsible for the shareholders' debts. The corporation is not responsible for the managers' torts [00:08:00] any more than the managers are responsible on an individual basis for that corporation's torts. That's all that we are saying We're simply emphasizing that the corporation is a separate entity that has a legal existence that is separate from, different from that of any of the living individuals or other entities that are in any way associated with the corporation.

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