{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Board of directorspermit the agent to act in the

Info iconThis preview shows pages 5–6. Sign up to view the full content.

View Full Document Right Arrow Icon
“board of directors…permit the agent to act in the management or conduct of the company’s business, they thereby represent to all persons dealing with such agent that he has the authority to enter on behalf of the corporation into contracts of a kind which an agent authorised to do acts of the kind which he is in fact permitted to do normally enters into the ordinary course of such business” Requirements: (1) Person is held out to have the requisite authority (words or conduct) o ie. “this is our MD” o It may be that the board is holding out the person to have the requisite authority by their acquiescence o Even if there is no statement by Board the internal structures ( such as a title, status and facilities such as having access to special stamp) are enough to say that the Board made the representation {Pacific Carriers} o Also failing to provide proper safeguards to protect itself and outsiders from unauthorised conduct may be part of the representation as well {Pacific Carriers} (2) This representation must by made by someone with actual authority o REMEMBER IT’S THE BOARD OR SOMEON WITH ACTUAL AUTHORITY THAT MAKES REPRESENTATION ABOUT THE PERSON’S APPARENT AUTHORITY o With regards to the person making the representation, authority can be express or implied MD has actual authority A person who is left to act as they please is inferred to have authority of the Board (this applies even if the checks and balances are in place, but they are not enforced) {Pacific Carriers} o Note a representation made by someone with apparent authority is not sufficient {Crabtree-Vickers Pty Ltd} This is meant to deal with randoms acting fraudulently on Company’s behalf (3) The other party must rely on this representation in entering in to the contract o If the other party is determined to enter into the contract regardless of authority then the apparent authority will not be recognised E. Curing Defects in Authority If a contract lacks substantive authority, the party seeking to enforce the contract may draw upon the statutory assumptions in {s 129 Corporations Act} or the indoor management rule E.1 Statutory Assumptions The aim of the statutory provisions was to tip the balance in favour of the business convenience and the third party and therefore in most cases the onus is shifted to the company to show that it is not bound by the acts that appear to bind the company directly or through an agent (1) Even with Fraud Assumptions stand: According to {s 128 Corporations Act} in dealings with a company, a third part person may make the assumptions in s 129. o This is even if the officer or agent of the company acts fraudulently or forges a document in connection with the dealings – so long as the third party does not know or suspect the assumption was incorrect {s 128(3) Corporations Act} (2) The Assumptions Third part can assume that: There has been compliance with the constitution and replaceable rules {s 129(1) Corporations Act} Persons
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}