From: Steve Davies (Steve365@btinternet.com)
Date: Fri Sep 12 2003 - 15:17:29 MDT
>
> On Friday, September 12, 2003, at 01:59 PM, Robbie Lindauer wrote:
> > On Friday, September 12, 2003, at 10:36 AM, Steve Davies wrote:
> >> Exactly right IMO. Limited liability can arise (and has) through the
> >> mechanisms of contract, without any resort to legislation.
> >
> > It's obviously FALSE that LLC's have arisen without resort to
> > legislation. LLC's have different legal dispositions in different
> > states and their ability to deflect legal responsibility from their
> > owners differs from state-to-state to. The law is very specific about
> > what kinds of things and LLC can and can not do.
Randall then said
> Well, I think Steve's statement was about limited liability in
> general, rather than the specific legal structure in some
> USian States called "LLC"s.
Exactly. There's nothing to stop individuals or groups of individuals from
drawing up contracts that limit the liability of one or both parties (it's
an example of contracting out of or around obligations). That's not the same
thing as the specific legal institution of the LLC, which was invented
pretty recently (mid-nineteenth century to be precise).
Robbie also said
It's likely false that they COULD. It's possible that you could write
a contract (without the backing of a government) that would "in theory"
limit your liability, it wouldn't ACTUALLY limit your liability because
without the government to INSIST that your liability is limited, the
victims of the companies "ERRORS" would come after you with pitchforks
(assuming they could find out who you were and what you'd done "by
proxy").
That's empirically false I'm afraid. Historically there have been mutual
enterprise contracts in which the liability of the investors for debts
arising from the enterprise were limited to the invested capital. These were
time limited (originally usually for one voyage - if Antonio had had any
brains that's what he would have done). The people who entered into
contractual arrangements with such a partnership were well aware of it and
could adjust their prices to take account of the perceived greater risk if
any. Point is it wasn't backed up by a legislated authority, so if the
perceived risk was too great no one would deal with the partnership. Also,
as I said, it didn't have perpetual succession, so the liability was limited
in time to the lifetime of the partnership.
Steve Davies
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