Authority Of Agents

Front 1

Actual Authority

Back 1

Express; enacting Model Reg 80 gives express power to the Board.

Implied; flowing from position Thomas Williamson Ltd v Bailieborough Co-Op

Front 2

Ostensible Authority

Back 2

Individual has neither express nor implied.

Freeman & Lockyer v Buckhurst Park Properties implied representation from the co. that Kapoor was allowed to act on it's behalf. 4 steps for established O.A;

-Rep to 3rd P from co.

-Rep from persons with actual authority to bind co

-3rd P induced by reps to enter into contract

-Only binding if Memo and Arts allow co to enter into contract of this kind & they can delegate authority in this manner.

Therefore, it must be the case that he contract may have legally existed.

Front 3

1) The Representation

Back 3

Usually the representation is by conduct; Armagas v Mundagas SA

Kett v Shannon & English distinguished where rep "which is intended to convey and does convey to the 3rd P that the arrangement entered into under the apparent authority of the agent will be binding on the principal"

Ulster Factors v Entonglen plaintiff not brought to attention that 2nd director would need to sign payments to 3rd P. Always one signature, so implied rep that this wouldn't be any different.

Front 4

2) The Representor Must Have Authority

Back 4

If co. do not adopt Model Reg 80, authority will lie with members.

Front 5

3) Reliance

Back 5

3rd P must have been induced, easy to prove as the fact of entering into the contract itself might constitute evidence of a reliance on the assumption that agent had authority.

Front 6

4) Capacity to Enter and Ability to Delegate

Back 6

Memo allows the co to enter a contract of this kind and the articles would have allowed this person to act on behalf of the co had he/she been properly appointed. Usually power to the Board (Model Reg 80), the MD (Model Reg 112), the Chairman (Model Reg 104) and Individuals have very little authority.

Front 7

Regulation 6

Back 7

Statutory Instrument 163 of 1973 Act provides that any action of the board of directors or a person registered under the Regulations will be deemed to be within the capacity of the company in favour of outsiders who act in good faith. In order to rely on this the person has to be registered with notice of their delivery to CRO and published or the outsider must have knowledge (Regulation 4).

Front 8

Indoor Management Rule

Back 8

This allows an outsider to assume the internal company regulations have been complied with so that when an agent has authority but that authority is subject to a precondition, the outsider is relieved from inquiring as to whether that precondition has been complied with.

Royal British Bank v Turquand co. borrowed in a way that need ordinary resolution. This was not complied with. Tried to argue bank had constructive notice of internal rules of co. Courts rejected this.

AIB Ltd v Ardmore Studios International Irish application of the above. Bank knew quorum of 2/3 directors needed. Got cert signed by 2 saying meeting had been held, but 3rd director never informed. Co. was still bound.

Front 9

Limitations to the Rule

Back 9

-Actual Reliance on M&A of Association; Rama Corp those who had not even read articles could not rely on the rule

-Public Record or Outsider Aware; Irvine v Union Bank of Oz bank had constructive notice special resolution had not been passed as it was not been filed with the CO

-Outsider Put on Inquiry; AI Underwood v Bank of Liverpool company cheques paid into personal a/c. Bank should've made further inquiries.

Front 10

Corporate Capacity Under Ultra Vires Rule

Back 10

If an act is ultra vires, it cannot be ratified by members. Must be contained in objects clause.

Asbury Carriage & Iron Co v Riche outside O.C to build railway line, so not bound

Cotman v Brougham lengthly O.C

Bell Houses v City Wall Prop directors could do anything considered advantageous to co.

Northern Bank Finance v Quinn must be advantageous or else U.V

Front 11

Ancillary Powers

Back 11

Incidental to achieve objects.

Rolled Steel Products v British Steel Corp court defined things in O.C which were necessary merely to achieve an end goal. May be considered independently.

Front 12

Implied Powers in Objects Clause

Back 12

Not everything the co. has the power to do will be stated in the O.C. If implied, must be in furtherance of the objects themselves.

PMPA Garages 9 co's, some recived loans from other guaranteed by those not involved. Financially justifiable as in everyones best interest for companies to succeed. Intra vires.

-Old Approach; if not in furtherance of an object or of benefit, then u.v as in Intro Ltd v National Provincial Bank where co. went into pig-breeding without changing articles and borrowed money. Held to be u.v

-New Approach; now if not of benefit or in furtherance of objects, not u.v but an abuse of directors powers and personally liable, as in the Irish case of Parkes & Sons Ltd v Hong Kong Bank

Front 13

Recovery of Money Given Ultra Vires by the Company

Back 13

AG v Great Eastern Railway Co implied power to make gifts, but only when incidental to co. business.

Hutton v West Cork Railway 2 gratuitous payments before co was put into liquidation, made to employees and directors. On the facts, not incidental to business as business no longer existed and therefore u.v

Parke v Daily News redundancy payment to employees, uv

Rolled Steel Ltd v British Steel Corp not reasonably incidental to guarantee debts of associated company.

Re Frederick Inns Ltd disposition to defraud creditors, u.v

Front 14

Section 8 CA 1963

Back 14

A ultra vires transaction may be enforced by an outsider if he is unaware it was u.v and he had no reason to be aware.

Northern Bank v Quinn solicitors read M&A and did not realize restriction. Irrelevant, having read them meant u.v and unenforceable.

Even if actually aware of u.v, enforceable if contract legally and effectively transacted - i.e he acted bona fide.

Re Frederick Inns Ltd could not rely on s8 as although unaware, not legally and effectively entered into (fraudulent)