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Legal fiction is an assumption that is technically untrue or unknown that is used to guide legal decisions. They derive their legitimacy from tradition and precedent as opposed to the word of the law. Generally speaking, the term is used without negative connotations as legal fiction include rules that greatly simplify legal interpretations. The following are illustrative examples.
AdoptionIn many jurisdictions, adopted parents are viewed as parents in every sense under the law. This is considered a legal fiction.Corporate PersonhoodThe concept of treating corporations as persons under the law dates back to Ancient Rome. This enables firms to maintain their own debt and commitments that don't extend to investors. Corporate personhood enables investment to flow freely as few would invest in stocks if they were responsible for debts beyond the value of their investment. It is possible for courts to disregard corporate personhood if it is used as a sham to break the law. This is known as "piercing the corporate veil."
Doctrine of SurvivalIf two people die at the same time or unknown times, the oldest is assumed to have died first.|
Type | Compliance | Definition | An assumption that is technically untrue or unknown that is used to guide legal decisions. | Related Concepts | |
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An overview of fiduciary duty.
A few examples of conflict of interest.
A definition of independent knowledge with an example.
A definition of segregation of duties with examples.
A definition of internal controls with examples.
The difference between conformance and compliance.
A definition of administrative burden with examples.
The definition of fair competition with examples.
The definition of insider information with examples.
A list of issues and principles related to business ethics.
Two legal concepts that commonly collide.
An overview of the precautionary principle.
The primary elements of professional conduct.
The definition of accountability with examples.
Examples of common business and personal values.
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The definition of gaming the system with examples.
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