Definition
A legal person (or artificial person) refers to any entity that is recognized by law as having the same legal standing as a natural human being. This includes corporations, government agencies, non-profit organizations, and other entities capable of owning property, entering into contracts, and being a party to legal proceedings.
Examples
- Corporations: When a company like Apple Inc. is sued or signs a contract, it does so as a legal person.
- Non-Profit Organizations: Entities like the Red Cross are treated as legal persons who can enter into contracts and own assets.
- Governmental Bodies: Municipalities and other governmental entities are considered legal persons.
Frequently Asked Questions (FAQs)
Q1: How does a legal person differ from a natural person?
A legal person is an entity like a corporation or government agency recognized by the law as having rights and responsibilities. A natural person is a human being.
Q2: Can a legal person be held liable in the same way as a natural person?
Yes, legal persons can be held liable in civil and some criminal contexts, similar to natural persons, although the nature of liability might differ.
Q3: How does the concept of a legal person benefit businesses?
The concept allows businesses to act independently of their owners, limiting personal liability and facilitating ownership transfer.
Q4: Can a legal person die or cease to exist?
Yes, a legal person can be dissolved or liquidated according to legal procedures, effectively “ending” its existence.
Q5: Are there any limitations to the rights of a legal person?
Legal persons do not have rights such as voting in public elections, which are reserved for natural persons.
Natural Person:
A human being with legal rights and responsibilities.
Corporation:
A company or group of people authorized to act as a single legal entity (legal person).
Corporate Personhood:
The legal concept that a corporation has some of the same legal rights and responsibilities as a natural person.
Entity:
Something that exists independently and is recognized by the legal system.
Liability:
The state of being responsible for something, especially in terms of legal or financial obligations.
Online References
Suggested Books for Further Studies
- “Business Law: Text and Cases” by Kenneth W. Clarkson, Roger LeRoy Miller, and Frank B. Cross
- “The Law of Corporations and Other Business Organizations” by Angela Schneeman
- “Corporate Law” by Robert W. Hamilton, Jonathan R. Macey, and Douglas K. Moll
Accounting Basics: “Legal Person” Fundamentals Quiz
### Can a legal person own property?
- [x] Yes, a legal person can own property.
- [ ] No, only natural persons can own property.
- [ ] Only individuals can own property on behalf of entities.
- [ ] The government can own property on behalf of legal persons.
> **Explanation:** Legal persons, such as corporations, are entity recognized by law as capable of owning property.
### Do legal persons have perpetual existence?
- [x] Yes, they can have perpetual existence until dissolved legally.
- [ ] No, they only exist for a certain period.
- [ ] Yes, but they must renew their existence annually.
- [ ] No, they cannot exist longer than the lifetime of their founders.
> **Explanation:** Legal persons such as corporations can continue to exist perpetually until they are dissolved through legal processes.
### Who is liable for the actions of a legal person?
- [ ] Individual owners are always personally liable.
- [ ] Only employees are liable.
- [x] The legal person itself is liable, but owners can be liable under specific circumstances.
- [ ] No one is liable.
> **Explanation:** The legal person (entity) is liable for its actions, although owners or certain individuals might face personal liability under certain conditions, such as fraud.
### Can legal persons enter into contracts?
- [x] Yes, legal persons can enter into contracts.
- [ ] No, only natural persons can enter into contracts.
- [ ] Only with government approval.
- [ ] Only in the state where they were formed.
> **Explanation:** Legal persons such as corporations can enter into contracts and engage in legal actions similar to natural persons.
### Which of the following is an example of a legal person?
- [x] IBM Corporation
- [ ] John Doe
- [ ] A park
- [ ] A rental apartment
> **Explanation:** IBM Corporation is an example of a legal person. John Doe is a natural person, while a park and an apartment are objects which can be owned by either a natural or legal person.
### What legal concept allows for a corporation to have rights similar to a natural person?
- [x] Corporate personhood
- [ ] Individual liability
- [ ] Collective bargaining
- [ ] Natural law
> **Explanation:** Corporate personhood is the concept that allows for corporations to have rights similar to those of natural persons.
### Are legal persons able to sue and be sued?
- [x] Yes, legal persons can sue and be sued.
- [ ] No, only natural persons can sue and be sued.
- [ ] They can sue but cannot be sued.
- [ ] Only through a designated representative.
> **Explanation:** Legal persons can engage in legal actions such as suing another party or being sued.
### Can non-profit organizations be considered legal persons?
- [x] Yes, non-profit organizations are considered legal persons.
- [ ] No, only for-profit entities are legal persons.
- [ ] Only if they file specific documentation annually.
- [ ] No, they are categorically different.
> **Explanation:** Non-profit organizations are recognized as legal persons and can perform legal acts such as owning property and entering contracts.
### What term refers to a person who has rights and obligations under the law?
- [ ] Real person
- [ ] Human entity
- [x] Legal person
- [ ] Corporate entity
> **Explanation:** A legal person has rights and obligations under the law.
### Which of the following cannot be a legal person?
- [ ] A government agency
- [x] A pet animal
- [ ] A corporation
- [ ] A non-profit organization
> **Explanation:** A pet animal cannot be a legal person. Entities like government agencies, corporations, and non-profit organizations can be legal persons.
Thank you for venturing into the world of legal persons! Keep expanding your understanding of this and other crucial legal concepts.
