Lawmakers confuse common law with equity – Corporate/Commercial Law


United States: The legislator confuses common law with equity

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Although never a colony of England, California has nevertheless adopted the Common Law of England as the rule for adjudication in state courts (except where contrary or inconsistent with the Constitution of the United States). United States, or the Constitution or laws of California). Cal. Civil. Code§ 22.2. To see Ahistorical Bedfellows: The California Corporate Code and the Common Law. England also had separate courts of equity and the distinction between law and equity remains important in some contexts. For example, fair questions are generally determined by the judge and not by a jury.

The California legislature appears to have forgotten or ignored the historical differences between law and equity when it enacted the California Revised Uniform Limited Liability Company Act. Section 17703.04(b) of the Companies Code begins by stating “A member of a limited liability company is subject to liability under the common law governing alter ego liability…”. The problem with this provision is that alter ego is a fair doctrine and not common law. To see Alexander v. Carillon Abbey, 104 Cal. App. 3d 39, 48, 163 Cal. Rptr. 377, 381, (1980) (“When considering the application of the alter ego doctrine to a particular situation, it must be remembered that it is a fair doctrine . . “).

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