Definition
Content
A grandfather clause (or grandfather policy) is a provision in which an old rule
continues to apply to some existing situations while a new rule will apply to all
future cases. Those exempt from the new rule are said to have grandfather rights or
acquired rights. Frequently, the exemption is limited; it may extend for a set period
of time, or it may be lost under certain circumstances. For example, a
"grandfathered power plant" might be exempt from new, more restrictive pollution
laws, but the exception may be revoked and the new rules would apply if the plant
were expanded. Often, such a provision is used as a compromise or out of
practicality, to effect new rules without upsetting a well-established logistical or
political situation. This extends the idea of a rule not being retroactively applied.
Piercing the corporate veil or lifting the corporate veil is a legal decision to
treat the rights or duties of a corporation as the rights or liabilities of its
shareholders. Usually a corporation is treated as a separate legal person, which is
solely responsible for the debts it incurs and the sole beneficiary of the credit it is
owed. Common law countries usually uphold this principle of separate personhood,
but in exceptional situations may "pierce" or "lift" the corporate veil.
A situation in which courts put aside limited liability and hold a corporation's
shareholders or directors personally liable for the corporation’s actions or debts. Veil
piercing is most common in close corporations. While the law varies by state,
generally courts have a strong presumption against piercing the corporate veil, and
will only do so if there has been serious misconduct like abuse of the corporate form
(e.g. intermingling of personal and corporate assets) or undercapatitalization at the
time of incorporation.
A simple example would be where a businessman has left his job as a director and
has signed a contract to not compete with the company he has just left for a period
of time. If he sets up a company which competed with his former company,
technically it would be the company and not the person competing. But it is likely a
court would say that the new company was just a "sham", a "fraud" or some other
phrase,[1] and would still allow the old company to sue the man for breach of
contract. A court would look beyond the legal fiction to the reality of the situation.
Despite the terminology used which makes it appear as though a shareholder's
limited liability emanates from the view that a corporation is a separate legal entity,
the reality is that the entity status of corporations has almost nothing to do with
shareholder limited liability.[2] For example, English law conferred entity status on
corporations long before shareholders were afforded limited liability. Similarly, the
Revised Uniform Partnership Act confers entity status on partnerships, but also
provides that partners are individually liable for all partnership obligations.
Therefore, this shareholder limited liability emanates mainly from statute. [2]
Quo warranto (Medieval Latin for "by what warrant?") is a prerogative writ
requiring the person to whom it is directed to show what authority they have for
exercising some right or power (or "franchise") they claim to hold.
The pertinent rules of Rule 66 on quo warranto provide:
SECTION 1. Action by Government against individuals. – An action for the usurpation
of a public office, position or franchise may be commenced by a verified petition
brought in the name of the Republic of the Philippines against:
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public
office, position or franchise;
(b) A public officer who does or suffers an act which, by the provision of law,
constitutes a ground for the forfeiture of his office; or
(c) An association which acts as a corporation within the Philippines without being
legally incorporated or without lawful authority so to act.
continues to apply to some existing situations while a new rule will apply to all
future cases. Those exempt from the new rule are said to have grandfather rights or
acquired rights. Frequently, the exemption is limited; it may extend for a set period
of time, or it may be lost under certain circumstances. For example, a
"grandfathered power plant" might be exempt from new, more restrictive pollution
laws, but the exception may be revoked and the new rules would apply if the plant
were expanded. Often, such a provision is used as a compromise or out of
practicality, to effect new rules without upsetting a well-established logistical or
political situation. This extends the idea of a rule not being retroactively applied.
Piercing the corporate veil or lifting the corporate veil is a legal decision to
treat the rights or duties of a corporation as the rights or liabilities of its
shareholders. Usually a corporation is treated as a separate legal person, which is
solely responsible for the debts it incurs and the sole beneficiary of the credit it is
owed. Common law countries usually uphold this principle of separate personhood,
but in exceptional situations may "pierce" or "lift" the corporate veil.
A situation in which courts put aside limited liability and hold a corporation's
shareholders or directors personally liable for the corporation’s actions or debts. Veil
piercing is most common in close corporations. While the law varies by state,
generally courts have a strong presumption against piercing the corporate veil, and
will only do so if there has been serious misconduct like abuse of the corporate form
(e.g. intermingling of personal and corporate assets) or undercapatitalization at the
time of incorporation.
A simple example would be where a businessman has left his job as a director and
has signed a contract to not compete with the company he has just left for a period
of time. If he sets up a company which competed with his former company,
technically it would be the company and not the person competing. But it is likely a
court would say that the new company was just a "sham", a "fraud" or some other
phrase,[1] and would still allow the old company to sue the man for breach of
contract. A court would look beyond the legal fiction to the reality of the situation.
Despite the terminology used which makes it appear as though a shareholder's
limited liability emanates from the view that a corporation is a separate legal entity,
the reality is that the entity status of corporations has almost nothing to do with
shareholder limited liability.[2] For example, English law conferred entity status on
corporations long before shareholders were afforded limited liability. Similarly, the
Revised Uniform Partnership Act confers entity status on partnerships, but also
provides that partners are individually liable for all partnership obligations.
Therefore, this shareholder limited liability emanates mainly from statute. [2]
Quo warranto (Medieval Latin for "by what warrant?") is a prerogative writ
requiring the person to whom it is directed to show what authority they have for
exercising some right or power (or "franchise") they claim to hold.
The pertinent rules of Rule 66 on quo warranto provide:
SECTION 1. Action by Government against individuals. – An action for the usurpation
of a public office, position or franchise may be commenced by a verified petition
brought in the name of the Republic of the Philippines against:
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public
office, position or franchise;
(b) A public officer who does or suffers an act which, by the provision of law,
constitutes a ground for the forfeiture of his office; or
(c) An association which acts as a corporation within the Philippines without being
legally incorporated or without lawful authority so to act.
