WS3: Capacity and authority Flashcards
Ashbury v Riche 1875
Company not incorporated with the requisite capacity
Re German Date Coffee Co (1882)
Company’s object was to acquire a German patent for producing coffee from dates; company got a Swedish patent instead and had a profitable business but was wound up by court as it could not achieve stated object
Bell Houses Ltd v City Wall Properties 1966
Court accepted an objects clause as valid that said: “to carry on any other trade or business whatsoever which can, in the opinion of the board of directors, be advantageously carried on by the company…”
Re Introductions Ltd v National Provincial Bank 1970
Company had an object of providing foreign visitors with accommodation and entertainment. Then diversified into pig breeding; bank unable to enforce a debenture as a secured creditor or as an unsecured creditor in liquidation because company acted ultra vires
Freeman and Lockyer v Buckhurst Part Properties 1964
– An actual authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts
– a director, (not managing) engaged claimants and then refused to pay their fees saying there was no authority. CoA held that director had ostensible authority because he was held out as MD and allowed to act in this way
Smith v Butler 2012
Court held that an MD could not suspend an executive chairman without express authorisation by the board; ‘implied powers of MD are those ordinarily exercisable by an MD in his position, subject to articles and express agreements’
Hely-Hutchinson v Brayhead 1968
Chairman and CE of a defendant company agreed that company would repay loans and indemnify a claimant against losses; defendant company argued he did not have authority to do this and company was not bound; but CoA held he had implied authority from months of entering into similar contracts and telling the board
Turquand’s case: 1856
Outsiders are entitled to assume that company’s internal procedures have been complied with
Rolled Steel Ltd v British Steel Corpn 1986
Where indoor management rule is disapplied because of 3rd party having notice of an irregularity or acting in bad faith
Morris v Kanssen 1946
Disapplies indoor management rule if 3rd party is an insider; e.g. a director of that company
New Falmouth Resorts Ltd v International Hotels Jamaica 2013
acts of an agent on behalf of the principal outside his actual authority may be adopted and ratified – if there is ratification it has a retrospective effect; rendering transactions with company binding on it from time it was entered into by the agent’
Rover Intl Ltd v Cannon Film Sales 1987
Until a company receives a certificate of incorporation by the Registrar of Companies it is not a legal person and has no capacity to enter into contracts
Phonogram Ltd v Lane 1982
regarding 3rd parties entering into pre-incorporation contracts with promoters - Must look at facts to see if there was an express agreement that signatory would not be personally bound
Hepburn v Revenue and Customs Commissioners 2013
[Interpreting S51: Consultancy services performed pre-incorporation; question regarded whether fees paid should be taxed as appellant’s personal income or company’s income; court held there was never any intention on anyone’s part that the appellant should become entitled to the fees]
Royal Mail Estates v Teesdale 2015
Applied reasoning of Phonogram v Lane and found that ‘the benefit of this contract is personal to the buyer’ is not enough to mitigate s51
