Natural persons and legal persons

In legal terminology, persons are entities capable of holding rights and obligations under the law. The concept distinguishes between natural persons—human beings recognised as individuals with legal capacity—and legal persons, which are artificial entities such as corporations, associations, or governmental bodies granted legal personality by law. This distinction forms a fundamental principle of jurisprudence and underpins civil, commercial, and criminal legal systems across the world.

Definition and Basic Distinction

A natural person refers to a living human being endowed with inherent legal rights and responsibilities. From birth until death, natural persons possess legal capacity, meaning they can own property, enter into contracts, sue and be sued, and bear legal duties. Their status is intrinsic and universal, independent of any formal act of recognition.
A legal person (also known as a juridical person or artificial person) is an entity created by law to act as a subject of rights and duties. Legal personality enables organisations, such as corporations, governments, and charities, to conduct transactions, hold property, and engage in legal proceedings in their own name, separate from the individuals who compose or manage them.
This conceptual separation ensures that the rights, liabilities, and existence of a legal person are distinct from those of its members or shareholders.

Historical Development

The recognition of legal personality beyond human individuals has roots in Roman law, which acknowledged collective entities (universitates) such as municipalities and religious corporations as having distinct legal existence. In mediaeval Europe, ecclesiastical bodies, guilds, and universities were granted corporate status, allowing them to own property and act in perpetuity.
Modern legal systems have since refined these concepts. The common law tradition, particularly in England, developed the notion of the corporation sole and corporation aggregate, enabling both individual offices (such as a bishopric) and collective entities to possess legal identity. Continental civil law systems codified similar principles, using the term personne morale or juristische Person to describe artificial persons recognised by law.
The development of corporate law in the nineteenth century, especially with the advent of limited liability companies, significantly expanded the practical importance of legal persons, shaping modern commerce and governance.

Characteristics of Natural Persons

Natural persons are distinguished by the following attributes:

• Legal Capacity: They possess the ability to acquire rights and assume obligations, although capacity may vary with age or mental competence.
• Status: Legal systems define individual status through aspects such as nationality, domicile, marriage, and parentage.
• Rights and Duties: Natural persons enjoy fundamental rights—civil, political, and human—protected by domestic law and international instruments such as the Universal Declaration of Human Rights (1948).
• Mortality: The legal existence of a natural person ceases upon death, at which point rights and duties are transferred through mechanisms such as inheritance or succession.

Characteristics of Legal Persons

Legal persons share many capacities of natural persons, but their status is derived from legal fiction or statutory recognition rather than natural existence. Their main characteristics include:

• Separate Legal Identity: A legal person is distinct from the individuals involved in its operation. This principle, exemplified in Salomon v A. Salomon & Co Ltd (1897), allows a company to exist independently of its shareholders.
• Perpetual Succession: Legal persons continue to exist beyond the lifespan or membership of their founders or officers.
• Limited Liability: Members’ personal assets are usually protected from the entity’s liabilities, depending on the legal structure.
• Capacity to Contract and Own Property: Legal persons can enter contracts, own property, employ individuals, and litigate.
• Creation and Dissolution: Their existence is determined by legal processes—such as incorporation, registration, or charter—and may end through dissolution or liquidation.

Types of Legal Persons

Legal persons may take various forms depending on jurisdiction and purpose:

1. Corporations: Commercial entities established for profit, such as companies and public limited firms.
2. Governmental Bodies: States, municipalities, and public institutions recognised as legal entities.
3. Non-Profit Organisations: Charities, associations, and foundations serving social, educational, or religious functions.
4. International Organisations: Entities such as the United Nations or European Union, which possess international legal personality under treaty law.

Each type operates within a defined legal framework determining its rights, obligations, and governance.

Legal Capacity and Rights

Both natural and legal persons can exercise rights and obligations, but the scope differs:

• Natural persons enjoy human rights, including personal liberty, privacy, and freedom of expression.
• Legal persons hold property and contractual rights, but not inherently human rights—although courts sometimes extend certain protections (e.g., freedom of association or due process) to corporate entities.

In corporate law, a company’s actions are attributed to it through the doctrine of attribution, meaning the acts and intentions of directors or authorised agents are treated as those of the company itself.

Liability and Accountability

Liability also distinguishes the two categories:

• A natural person is personally liable for civil wrongs or crimes committed by their own actions.
• A legal person may incur civil or criminal liability through the conduct of its representatives. For example, a corporation may be fined for regulatory offences or negligence.

However, unlike natural persons, legal persons cannot be imprisoned, and their penalties are typically financial or administrative.
In cases of corporate misconduct, directors and officers may also bear personal responsibility if they act unlawfully or beyond their authority.

Legal Personality in International Law

International law extends recognition to both natural and legal persons in distinct ways. States and international organisations are primary subjects of international law, while individuals may acquire limited legal standing, particularly in human rights and criminal jurisdictions.
For instance, under the International Criminal Court (ICC) framework, natural persons may be held individually accountable for war crimes or crimes against humanity. Legal persons, conversely, are generally not subjects of international criminal law, though they may have rights and obligations under international economic law or investment treaties.

Comparative Perspectives

Legal systems differ in how they define and regulate personhood:

• Common law jurisdictions (such as the United Kingdom and the United States) emphasise judicial interpretation and precedent in determining the scope of legal personality.
• Civil law jurisdictions (such as France and Germany) rely on codified statutes specifying categories of legal persons and their capacities.
• Religious and customary legal systems may adopt unique definitions of personhood, sometimes linking legal status to moral or communal standing rather than formal recognition.

Philosophical and Ethical Considerations

The notion of legal personhood also raises philosophical debates about what entities should be entitled to legal recognition. Historically, the concept excluded certain human groups (such as enslaved individuals or women under early law), highlighting evolving social definitions of personhood.
In modern contexts, discussions have emerged around extending limited legal personhood to animals, artificial intelligence systems, and environmental entities such as rivers or ecosystems, as seen in the legal recognition of the Whanganui River (New Zealand) as a legal person in 2017. These developments challenge traditional human-centric conceptions of legal identity.

Significance in Contemporary Law

The distinction between natural and legal persons remains foundational to legal reasoning and structure. It ensures clarity in attributing rights, obligations, and liabilities, enabling societies to organise complex economic and social relations. The recognition of legal persons allows for collective action, continuity, and accountability within commercial and institutional life, while the status of natural persons preserves the primacy of individual dignity and autonomy.