Back
We continue to provide our legal services through the COVID-19 lockdown. Please visit our COVID-19 Hub for legal insights, or contact us directly.
Get in Touch Menu

Bringing an action against an individual in a company

21 March 2012

Clients often want to know whether they can bring an action against an individual involved in a company – a sole shareholder or director maybe – even though their contract was with the company.

This can be tricky. In English law, an individual is separate from the company and generally not liable for its wrongdoings. This is often described as ‘the corporate veil’. It is difficult to lift the veil and the protection it affords to the individuals behind the company.

In some circumstances, the courts have been willing to lift the veil. Most often this has been in cases where there has been fraudulent misrepresentation or deceit by an individual involved in the company. That said, even when the courts are willing to lift the veil there are still limits on the nature of the claim.

In the recent case of VTB Capital plc v Nutritek International Corp for example, the court found that a previous judgment, which had lifted the corporate veil to allow a claim in contract, had been wrongly decided.

If you want to ensure you have rights against key individuals involved in a transaction, a simple precautionary measure may be to join them as guarantors and parties to your agreement. A combination of thinking ahead and careful drafting may put you in a much stronger position should a contract go wrong.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

Contact us

Contact
Nick Cox LLB (Hons)
Partner
View profile
Nick Cox
Related services
Share this article
Resources to help

Related articles

The classic car market & the law - Q&A

Classic car disputes

The classic car market is a multi-billion pound industry, not surprisingly with many legal complications, but that shouldn’t impair the joy these four-wheeled icons can bring… What kind of businesses…

Paul Gordon LLB
Partner

Turning a blind eye: the concept of 'dishonest assistance'

Litigation & dispute resolution

The court has shed light on the legal concept of ‘dishonest assistance’, in the recent case of Group Seven Limited & Others v Notable Services LLP & Others [2019]. By…

Paul Gordon LLB
Partner

Legal brain Q&A: A guide to intellectual property rights

Intellectual property disputes

They say that imitation is the highest form of flattery. But when it comes to intellectual property, a competitor copying your ideas can put your business’s whole operation and finances at…

Paul Gordon LLB
Partner
Contact us