A “legal personality”   

Wednesday 9 September, 2015

Welcome to all new readers of Hostile Monkey. It seems Weekend At Bernie’s was popular (or, unpopular, depending on your perception).

It has been pointed out to the Monkey that the use of the phrase “legal personality” in reference to a car or a house, is incorrect and a fact howler (never let it be said that the Monkey doesn’t own up to its own mistakes).

In order to have a “legal personality”, something (or someone) has to be capable of holding legal rights and obligations (this also applies to “legal entities” such as companies, cooperatives, charitable organisations or any other group of persons acting as though they are a single person for specific purposes, such as a trade union).

The use of the phrase was perhaps clunky in this context – and was intended to refer to a “legal asset”; ie. any form of property (physical or intellectual) with an inherent, intrinsic or perceived economic value.

The point behind the phrase remains the same; a football club does not have a “legal personality”, and is therefore not a “legal asset” that can be bought or sold – only assets that carry an economic value can be legally bought or sold.

So, for example: buildings, contracts, vehicles, computers, land and intellectual rights would all be considered legal assets (or, a house, or a car – or an original work of artistry such as a novel, a painting, a photograph or a screenplay). A company is a legal asset, and also has a “legal personality”.

A medal, or a physical trophy would be considered a legal asset, provided it had either been gifted as an award in perpetuity and remained in the keep of the benefactor (so, not, for example if it was awarded or loaned for a limited period of time, in the way the Scottish Cup would be – such a trophy would always remain the property of its owners, in this case the Scottish Football Association).

So, for example, individual memories of a company Christmas Party in 1986 could not be termed as a legal asset, despite having actually taken place, perhaps even on company property, making use of company resources – replete with photographic evidence and fondly remembered by many company employees who were present – since the memories have no inherent economic value, only sentimental value, and therefore cannot be party to a legal exchange.

So, to be clear: in the process selling a failed company, if an item is not considered a legal asset, it does not exist and cannot be bought or sold in any legal sense.