Acorporation is a company or business with an independent legal entityowned by shareholders. Corporations are classified as public orprivate depending on the ownership. They can be profit or non-profitmaking, domestic or of foreign origin. In addition, corporations canbe publicly held or closely held, and professional. However, theseclassifications are not mutually exclusive but, can overlap, forexample, private profit making Domestic Corporation (Mann, Roberts &Smith, 2000).
Theprincipal attributes of a corporation are: It is a legal entity withseparate rights of shareholders can sue or be sued, and engage incontracts. A corporation owes its existence to the state which isresponsible for controlling its activities. It has limited liabilityin that the shareholders are not held responsible for its debts. Itexists perpetually by being bound in tits article of incorporation.It has a centralized management by a board of directors. Acorporation is considered as a person/citizen. Finally, a corporationhas the ability to transfer shares freely by way of sale or gift(Mann, Roberts & Smith, 2000).
Incertain circumstances, a court of law may bring down the wall ofprotection (veil) granted to a corporation to limit shareholderliability. The doctrine of piercing the corporate veil is the settingaside of the protection granted to a corporation due to litigationpurposes (Mann, Roberts & Smith, 2000). In such as case, thecorporation’s liability can be imposed on individual shareholdersor other entities behind it. This occurs when the corporation commitsfraud or injustices continuously or if it acts contrary to the lawsgoverning it.
Acontract can be summarized as a lawfully enforceable agreementbetween two parties. Corporations have a legal entity to enter intocontracts. The dissolution of the contract is, however, dependent onperformance, breach, or discharge. Dissolution by performance occurswhen the tenacity of the agreement was fulfilled adequately by bothparties. Dissolution by breach occurs when one of the parties fail toperform as per the terms set in the contract, thus, giving the inuredparty the right to damages caused (Mann, Roberts & Smith, 2000).In addition, both parties may come together and agree to dissolve thecontract voluntarily before fulfilling the purpose of the agreement.
Mann,R., Roberts, B., & Smith, L. (2000). Smithand Roberson`s business law.Australia: West Legal Studies in Business.