Jones vs Lipman Case summary
Facts:
Lipman agreed to sell a property to Jones for £5,500 then he formed a company, Shareholders Ltd., to avoid specific performance. Lipman transferred the property to the company for this Jones sued Lipman and Shareholders Ltd. for specific performance hence the issue arised.
Issue:
Can a company be used to evade contractual obligations and avoid liability?
Relevant Legal Concepts:
1. Lifting the corporate veil.
2. Separate entity doctrine.
3. Abuse of company structure
4. Specific performance.
Decision
The court ruled that Lipman should be bound by the contract and that specific performance should be the remedy. The court lifted the corporate veil and required specific performance from both Lipman and his company. The court found that Lipman’s company was a sham and a mask to avoid recognition by the eye of equity.
Consequences:
1. Lipman held liable for contractual obligations.
2. Established precedent for lifting the corporate veil in cases of abuse
3. Emphasized court's discretion to disregard separate entity doctrine,.
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