Disregarding the Entity of Private Corporations [Part 1]

Although the device of incorporation has a number of advantages over other types of business organization such as partnerships, joint stock companies, and common law trusts, the advantage that has held the greatest appeal to prospective stockholders has been the advantage of limited liability. This advantage probably accounts for the widespread popularity of incorporation as a business device. In the last 100 years corporate growth has been such that it dominates the business life of the country. It has become apparent with the passage of time, however, that the device of incorporation can be used in such a way as to frustrate the legitimate purposes or effects of incorporation. In addition to statutory regulation, therefore, courts have been compelled to remedy this situation to do justice . It has been principally in connection with this effort that the doctrine of disregarding corporate entity has been developed