Legal Personality: Definition, Example and Related Terms
What is a Legal Personality ?
Legal Personality refers to the ability of an entity, such as a person or an organization, to participate in legal activities, such as entering into contracts, owning property, and suing or being sued. In simpler words, it's like being a player in the game of law. If you have a legal personality, you can play the game, which means you can make moves like signing a contract or buying something. If you don't have a legal personality, you're not allowed to play. In the world of business, legal personality is very important because it determines who can do what. For example, a company has a legal personality, so it can sign contracts, hire employees, and buy or sell goods or services.
Example(s)
Scenario Description A manufacturing company, ABC Limited, enters into a contract with a supplier for the delivery of raw materials. In this case, ABC Limited, being a company, has a legal personality. This means that it can legally enter into a contract with the supplier. The contract is valid and enforceable because ABC Limited is recognized by law as capable of making such agreements. XYZ LLC, a software development firm, sues a client for non-payment of services rendered. XYZ LLC, as an entity with a legal personality, has the right to take legal action against a client who fails to fulfill their contractual obligations. The law recognizes XYZ LLC as a 'person' that can be wronged and therefore, has the right to seek redress in court.