A corporation is a legal person having existence apart from that of its individual members. It is recognised by law as a new being, a distinct persona, creating an absolutely different entity from those who compose it. A firm is not a legal person. It has no distinct legal entity, it being only the sum of its individual members.
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A corporation can contract with its individual members as it is a distinct entity from the members composing it; a firm having no distinct personality cannot so contract.
ADVERTISEMENTS:
A corporation can possess property, have rights and duties and liabilities as a distinct person; the property and the debt of a firm are nothing else than those of the partners.
Each partner is an agent of the firm to make contracts, but a member of the corporation is not an agent of the company.
A corporation is a permanent legal entity and is not affected by the death of its members. There is no such permanence in a firm. A change in the list of partners is the substitution of a new firm.
A corporation aggregate cannot act or express its will except by deed under its common seal. There is no such formality in the case of a firm.
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In the case of a corporation the liability of the shareholders is usually limited; in the case of a firm the liability of the partners is unlimited.
A corporation secures the monopoly as to its name; a firm cannot always claim such a monopoly.