miércoles, 22 de mayo de 2024

Legal personhood and Henry Hansmann's wife



Para Henry Hansmann, con mi admiración

Legal personhood is a major topic of study in which the differences between common law countries and civil law countries are still great. Maitland, the great historian of English law, introduced civil law ideas on legal personality first to England and then - at the beginning of the 20th century - to the United States. American scholars at the beginning of the 20th century are indebted to Gierke, even if they do not openly acknowledge it. 

Before the 20th century, the concept of a legal person did not exist in the American discussion. You can do a Google search. Only the introduction of Gierke's ideas at the beginning of the 20th century allowed American scholars to deal with these questions. The common law - as Maitland explained - had the Trust and the Trust made the idea of the legal person unnecessary.

The issue with the American discourse on this topic is the lack of distinction between the concepts of  'legal personhood' or legal person and 'corporation'. These terms are often used interchangeably, yet they are not synonymous. Legal person belong to the 'things' realm and the corporation belong to the realm of 'contracts' in a broad sense


A corporation is simply a way of organizing a supra-individual endeavor (a corporation is a collective action tool to organize a university, a town, an association or a church guaranteing perpetual succession), that is, a way of setting rules for making decisions and making individual members interchangeable and disposable. A corporation becomes a subject of law - a legal person - when it has a patrimony (a set of assets linked together by the purpose or objective to which they are dedicated, the purpose being established in the charter forming the corporation). There are corporations without assets and therefore, without legal personality: they are very rare but they exist i.e., some insurance mutuals that ask for members contributions each time there is a casualty; or the condominium.

That a legal person is a subject of rights means that it has assets because if it does not have assets, it cannot be held liable, nor can it acquire other assets, nor contract debts or stand in a trial. Humans without assets still have the physical ability to work and "they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness". Not so with legal persons. 

Therefore, the concepts of corporation and legal person must be distinguished.

In most Western countries, there are legal entities that are not corporations. Partnerships or LLCs have legal personality in France, Italy, Spain, Germany and all of America except the US (I would dare to say that today, partnerships are recognized as legal persons even in England or US )

The distinction between a legal person and a corporation leads to the distinction in civil law countries, between legal capacity (capacity to be the holder of rights and obligations) and capacity to legally act  (capacity to enter into contracts, acquire property, contract obligations, etc.).

Hansmann's brilliance lies in his ability to leverage the civil law tradition, through his marriage to an Italian professor of civil law, in conjunction with the common law tradition. This unique perspective enabled him to elucidate the concept of a legal person through the principle of "asset partitioning." Hansmann and Kraakman said: 

“[T]he core element of legal personality… is what the civil law refers to as ‘separate patrimony”  
“The core function of this separate patrimony has been termed ‘entity shielding,’ to emphasize that it involves shielding the assets of the entity—the corporation—from the creditors of the entity’s owners… Starting from the premise that the company is itself a person, in the eyes of the law, it is straightforward to deduce that it should be capable of entering into contracts and owning its own property (entity shielding); capable of delegating authority to agents (authority); and capable of suing and being sued in its own name (procedure)…”

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