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BUSINESS ORGANISATIONS AND AGENCY CORPORATE PERSONALITY 370 Carlton Communications, Granada Media plc v Football League [2002] EWHC 1650 (Comm) – Carlton and Granada owned 50% each of the shares in ITV Digital Holdings, which was the parent company of ONdigital plc. Under a TV broadcasting contract between ONdigital and the Football League, ONdigital was to pay the Football League £89m in 2001 and 2002. However, the company had gone into administration and was unable to pay this money. The Football League claimed the money from Calton and Granada on the ground that ONdigital had made a unilateral offer to guarantee the payment as their agent. However, the alleged guarantee was in the initial bid document, and the contract itself contained no such guarantee. Carlton and Granada claimed that it did not make any guarantee; that any guarantee was made by ONdigital on its own account; that even if there was a guarantee, it was unenforceable since it was not in writing; and that the alleged guarantee would not entitle the Football League to damages for anticipatory breach. It was held that there was no guarantee as the alleged guarantee was not in writing and was made prior to the execution of the contract. Moreover, ONdigital was not an agent of Carlton and Granada merely because they were its shareholders. According to the court: Download free eBooks at bookboon.com Click on the ad to read more
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BUSINESS ORGANISATIONS AND AGENCY 371 CORPORATE PERSONALITY It is trite law that a company has its own legal personality distinct from its shareholders:  Salomon v Salomon & Co [1897] AC 22 . The fact that a company can in common parlance be said to carry on business on behalf of its shareholders does not make the company the agent of the shareholders. See also Yukong Lines Ltd of Korea v Rendsburg Investment Corp. of Liberia [1998] 1 WLR 294. 20.3.6 GREATER CAPACITY TO RAISE CAPITAL Due to separate legal personality and the ability to acquire properties in its own name, a company could borrow money on the security of its own assets. In particular, a company can borrow money using floating charges on its recurrent assets – a facility not available to most partnerships. In addition, a public company could raise money from members of the public by the issue of its shares. This facility enables the company to generate huge resources for its business, leading potentially to great expansion. Although a private company may not issue shares to the public, it may also raise more money be issuing more shares to its existing shareholders, or privately to other persons. 20.3.7 SEPARATION OF OWNERSHIP AND MANAGEMENT The owners of a company are not necessarily is managers and need not be. In fact, unless otherwise agreed, owners of companies are not automatically entitled to be its directors. This separation of ownership and control enables persons – natural and corporate – to acquire interests in, and benefit from, companies without having to shoulder the responsibility of management. This separation also enables a member of a company to be employed as
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  • Fall '19
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