Case and Purpose
Salomon’s Case – The Nature of a Corporation: Separate Corporate
Salomon owned a successful shoe business. Later on, he decided to start a
corporation in which he owned 20001 of 20007 shares. His family members owned
the remaining 6 shares in order to fulfill the statutory requirement.
His shoe business was sold to the corporation but a downturn in the shoe
industry caused by loss of government contracts and strikes drove the corporation
into insolvency. There are still debts owed to his debtors.
A trustee claimed that the corporation did not exist, and that Salomon was
the true owner of the business and was also the real debtor.
The House of Lords supported Salomon’s side since there was no fraud or
any intention to deceive. The corporation was properly created and was solely
responsible for it’s own debt, since it is it’s own ‘natural person’. The Canadian
Business Corporations Act.
Peoples vs. Wise – Corporate Governance: Directors’ and Officers’ Duties
Wise bought Peoples. The three brothers were the majority shareholders,
officers, and directors of Wise. They also became the sole directors of Peoples.
The integration of the two operations did not go smoothly, especially in the
areas of inventory control and bookkeeping. The inventory system was soon in total
chaos; suppliers went unpaid.
Both Wise and Peoples declared bankruptcy. Peoples’ bankruptcy trustee
sued the Wise brothers personally, claiming they breached the duties owed to
The Supreme Court of Canada held that there was no fiduciary duty owing to
the creditors or other stakeholders. The interests of the corporation are NOT to be
confused with the interests of the creditors or those of any stakeholders However,
duty of skill and care was not limited to the corporation.
The Court held that the Wise brothers met the required objective standard of
skill and care by acting prudently and on a reasonably informed basis. The creditors
were denied a remedy. S.122 Kanitz vs. Rogers – Leading Canadian decision on website service contracts
A number of Rogers Cable customers started a class action to challenge
rogers amending of the arbitration provision in their user agreement (resolutions of
disputes can only take place outside of courts).
The claim was that customers were not given sufficient notice of the
amendments to make it valid. Rogers should have emailed all its customers to
properly notify them.
The Court held that the notice given was sufficient and that an email was not
necessary. It was determined that it is the obligation of the customer to check for
changes in the user agreement.
Also, the Courts upheld the arbitration agreement as well as a “no class
actions” clause. Parts of the contract that forbade customers from going to a regular
court and suing as a class action were deemed valid. The exemption clauses shifted
liability settlement away from court to an arbitration process.