Separate legal entity

In the United States, a separate legal entity or SLE refers to a type of legal entity with detached accountability. A business can be set up as an SLE to legally separate it from the individual or owner, such as a limited liability company or a corporation.[1][2]

If a business is a separate legal entity, it means it has some of the same rights in law as a person. It is, for example, able to enter contracts, sue and be sued, and own property. Sole traders and partnerships are not separate legal entities from the owners.

Frequently, the legal entity's independence is contingent upon the managers of the entity maintaining corporate formalities, keeping personal and corporate funds separate, and holding the entity out to the world as separate and distinct from its owners and managers.

The doctrine of Separate Legal Entity in English Law came into existence with Saloman v Saloman [1897] and which was later affirmed in Lee v Lee’s Air Farming Ltd [1960] UKPC 33.

Further reading : The case of Salomon vs Salomon & Co ltd 1897

References

  1. ↑
  2. ↑ A Two-Edged Sword: Salomon and the Separate Legal Entity Doctrine, retrieved 19 December 2009

See also


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