What are natural persons and legal persons?
What Is a Natural Person?
- A Natural Person refers to a real individual
- A natural person has legal rights and obligations under the law
What Is a Legal Person?
- A Legal Person is an organisation established under the law
- Examples include:
- Companies
- Associations
- Foundations
- A legal person also has legal rights and obligations
- However, those rights are exercised through its authorised representatives or management
The Key Difference
- A Natural Person is an individual
- A Legal Person is an organisation
What Can Both Do?
- Own property
- Enter into contracts
- Sue or be sued
- Assume legal responsibilities
Different Liability Structures
- A Natural Person's liability may extend to their personal assets
- A Legal Person's liability is generally limited to its own assets
- It does not necessarily extend to the personal assets of its shareholders, directors, or managers
Why Is the Distinction Important?
- Natural Persons and Legal Persons have different legal identities
- Their rights and responsibilities are exercised differently
- As a result, they play different roles in legal and business relationships
Summary
- Natural Person = A real individual
- Legal Person = An organisation established by law
- Both possess legal rights and obligations, but their liability structures different