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The Concept of Limited Liability
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Description : The concept of juridical person and the idea of limited liability are cor-nerstones of the western capitalist economic system. Simply and truly a ‘juridical person ' is a non - existing or imaginary pers on created by western law. This imaginary or fictitious person is regarded as a legal entity supposedly having transacting and contractual ability and powers in the same or in almost the same way as a real, living human being. It is a ‘person' existing o n paper and in relation to the word ‘person' it is pure fiction. Although the ‘juridical person' is acknowledged and understo o d to be a figment of the imagination of men, it is nevertheless accorded some consequences in the capitalist system of economics. The two main consequences of the fictitious man created by western economists are:
(1 ) The acquisition of capital from investors
(2 ) Insulating the partners of the business enterprise against the debt they owe their creditors. This safeguard which the ‘juridical person' provides is termed the ‘principle of limited liablity'.
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Author : Mujlisul-Ulama of South Africa
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