How are corporations treated in legal terms?

Corporations are treated as separate legal entities, which means they possess their own legal rights and obligations distinct from those of their owners or shareholders. This separate entity status grants corporations the ability to enter into contracts, own property, sue, and be sued in their own name. This legal framework is foundational for corporate law, allowing businesses to operate independently of their owners while providing a layer of protection from personal liability for the shareholders.

The concept of corporations having their own rights is critical in commercial law because it enables corporations to function in the marketplace and engage in transactions as if they were individuals. The legal recognition of corporations as separate entities supports economic activities, fosters investment, and contributes to the overall stability of the business environment.

In contrast, other options incorrectly represent the status of corporations. For instance, stating that corporations have no rights and cannot be sued misrepresents their legal status. Likewise, suggesting they are treated like individuals only for tax purposes disregards their broader legal standing in commercial law. Lastly, the notion that they have fewer rights than partnerships is inaccurate because corporations generally enjoy a distinct and fully recognized set of rights under the law.