C for a pty company that has a sole director who is

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(c) for a Pty Company that has a sole director who is also the company secretary – that director Under {s 127(4) Corporations Act } it is also possible for the constitution to set out procedures B.3 Substantive Authority Substantive authority requires a decision on the part of the company to enter into the contract – this way the company agrees to the substance of the agreement Substantive authority will normally be given by a separate resolution of the Board – the second resolution will be to sign the contract B.4 Enforcing a Defective Direct Contract Where a company purportedly enters into a contract directly, the company will prima facie not be bound where there is want of either formal or substantive authority o Eg. Formal authority – there may be a defect in the actual execution of the document o Eg. Substantive authority – company has expressed no desire to be bound (there is no board resolution to enter into the contract) Common Law At Common Law a defect in formal authority cannot be overcome However a defect in substantive authority may be overcome if the third party argues that the company gave implied actual authority or apparent authority to commit the company to the transaction see below o It may also be possible to use the indoor management rule Statute Under statute a defect in formal authority may be overcome by the statutory assumptions (specifically {s 129(5) or (6) Corporations Act} Under statute a defect in substantive authority may be overcome if the third party is able to rely on a statutory assumption Therefore if the company contracts directly but fails one of the formal or substantive requirements then look to common law and statutory definitions of implied authority and apparent authority C. Agent Contracting Under {s 124(1) Corporations Act } the company has power to enter a contract which can be exercised via STS Corporations Law Hadi Mazloum: [email protected] 3
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Corporate Authority delegation to an agent under {s 198C Corporations Act} Additionally under {s 126 Corporations Act } an agent with implied or express authority can enter in a contract for the company The fundamental issue is whether the person purporting to act for the Company possesses the requisite authority to bind the company D. Requisite Authority to Act for a Company Whether the contract was entered into Directly or by Agent, if it seems to lack substantive authority then consider what can constitute the requisite authority Requisite authority to bind the company can be either: o Express actual authority o Implied actual authority o Apparent authority D.1 Express Actual Authority Express actual authority can be manifested in several ways: o Through the company’s constitution o Board resolution confers express actual authority {s 198A(2) Corporations Act} o Delegation of authority to agent by Company’s directors to Managing Director {s 198C(1) Corporations Act} o
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  • Fall '09
  • Law, Corporation, formal authority, corporate authority

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