In the modern day regulations and precedents which surround the practice of business law, one of the most significant and influential of concepts that have impacted on such practices can be found in the form of the notion of corporate personhood, a concept which has been used to implement the nature and place of corporations in the contemporary structure of law which surrounds the world of business. Because of the acceptance of this legal doctrine, businesses are enabled to behave in certain ways under the law as if they are persons, not across the board, but in reference to certain of their functions which can be more effectively put into action under law through this rule. The essential tenet of this branch of business law is to allow a group of people who have jointed together for a specific purpose, which most commonly can be defined as business activity for the purpose of profit, to be considered in the legal system as a kind of composite person, who can thus enjoy certain provisions among the rights which are dispensed to actual, literal individuals as part of the basic protection of human rights guaranteed by most legal systems. The adoption of this legal doctrine as a guiding principle in the modern world of business law is a driving force behind widespread financial practices and as such has attracted heavy attention from legal scholars, professionals and activists, at some points in protest against the uses to which it has been put and the interpretation of its various deciding precedents and decisions which have exercised a decisive effect in the corridors of legal thought and business practice. What few people can doubt is that this doctrine arose out of and is uniquely geared toward addressing certain issues which exist as determined by the current global financial decision of large scale business institutions funded and run by large arrays of people, but some have mounted legal, ethical, or political arguments that it should not be allowed to hold quite the same place that it has up to this point, while others see the corporate personhood concept, though possibly not without its potential pitfalls and internal contradictions, as a touchstone of modern day business law.
The legal doctrine which allows a company owned and run by different people to act as if it is and to be considered as hewing to the understanding of an individually, legally protected human being is considered in the world of law commentary to constitute a form of a tool widely used throughout the legal system, that of a legal fiction. Despite the connotations of the word “fiction” in many quarters as carrying negative associations when applied outside the realm of literature and storytelling, for the purposes of the world of law fiction is not a deprecatory term, but simply refers to a tenet which may not be intuitively or naturally present in the world but is agreed upon by legal authorities to be necessary for people to widely agree upon as if it is true. Some examples of this kind of legal thinking that preceded the decisions surrounding the concept of legal personhood and which may help explain how it operates and thus how it has come to seem useful to the practitioners of business law can be furnished by an examination of practices such as adoption, in which, in addition to giving a person who is not the parent of a child the right and ability to be considered under law as constituting that child’s parent, the actual parents of a child may find themselves redefined to a point where they are considered to have no more innate legal relationship to that child than would any other randomly selected person. Another example of a legal fiction which preceded the adoption of the doctrine of corporate personhood can be found in English law in the rules which treated punishments for the offense of what the American legal system would call the “fencing” of stolen goods, and in English law is referred to as “handling.” Prior to the adoption of laws governing “handling” offenses, the legal system treated offenders in this arena by adopting the legal fiction that fences were also guilty of stealing when they sold goods which they possessed no right to. Thus, the legal fiction of corporate personhood is designed to allow the implementation of ideas which cannot be said to exist in the physical world but have been found convenient for consideration as if they were real.
The functions of the legal doctrine of corporate personhood are intended to work in the system of law for both empowering and restraining the corporation in question, as is deemed necessary for the interest of financial professionals and the wider public in general. Prior to the adoption of this legal concept under the rubric of business law, it was found difficult in courts of law to hold corporations to legal account for their actions, since an essential feature which commonly stands behind the impulse arising on the part of businesspeople to establish a corporation is the limited liability which participation in such a venture will expose them to, as compared to an individually owned company. In the American system of law, the implementation of this doctrine has proceeded through the framework of the Fourteenth Amendment to the United States Constitution. This tenet of business law was first suggested a future course for the legal system to take by the 1819 case Dartmouth College v. Woodward, which established that corporations enjoyed the same rights to make contracts and enjoy their legal protections as individuals. It was strengthened by the landmark 1882 decision made the Supreme Court in reference to the case “Santa Clara County v. Southern Pacific Railroad,” which stated that corporations should be recognized as enjoying many of the same rights enjoyed by individuals under the United States system of law. Former Vice-President Al Gore, among others, have taken aim at this decision’s use in modern business law.