• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Unauthorised transaction in business law.

Extracts from this document...

Introduction

Unauthorised Transaction In Business Law This question is related to unauthorised transactions more specifically those relating to express authority of an officer dealing with a 3rd party. Firstly statutory protection can be examined as this provides some important points through S35A of the Companies Act 1985. The main point is that the section is in favour of a person dealing with a company in good faith and more importantly that a 3rd party is still considered as acting in good faith if they are aware that the officer did not have authority to carry out a transaction. In this case it seems the 3rd party need not concern himself with issues relating to express authority however common law may prevail. ...read more.

Middle

In this case the 3rd party must ensure they enquire into size and nature of transaction. This seems to be the main proviso. Overall the 3rd party is protected through statute and common law. This question is related to Ultra Vires contracts more specifically their validity in relation to the objects of the company. The contract between Hewitts Ltd and Toytown Council can be examined using the Companies Act 1989. The initial contract was Ultra Vires because there was no specific reference to the activity it undertook in its memorandum of association however if the memorandum contained a subjectively worded clause giving the directors the power to direct the companies activities then the contract could be Intra Vires. ...read more.

Conclusion

and again the directors are liable for breach of fiduciary duty in this case. One point to consider however is that Easy Finance was provided with a lot of information regarding the loan including a board resolution approving the loan. If it can be shown that Easy Finance did not consider the "size or nature" of the loan when granting it to the company then Hewitts Ltd may be able to escape its contractual duty to take the loan (Houghton & Co V Nothard, Lowe & Wills Ltd 1927) It does seem that considering the amount of information the finance company was given they should have realised that the contract would have been Ultra Vires. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Contract Law section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Contract Law essays

  1. Do company directors have right to run their own company

    In Romer J's 2nd rule on attending board meetings, executive directors have greater emphasis to attend but non executives do not need to give up much time. If executive directors miss board meetings continually for 6 months they can be dismissed.

  2. Trust Law: 'Where an unincorporated association is dissolved, the present law presumes that ...

    follow the approach of authorities such as Re Recher, whilst differing from that of the authorities such as Re West Sussex.

  1. Whether the common law fiduciary duty or duty of fidelity and good faith gives ...

    The duty of mutual trust and confidence which is emerging in the common law but is still subject to much controversy is considered the extension of the employee's duty of co-operation and fidelity. Accordingly, this essay will explore the fiduciary nature and obligations between employers and employees which is addressed in Part A.

  2. Do companies have complete freedom to act? Analyse the doctrine of ultra vires and ...

    Farrar states that the legal privilege theory "emphasised responsibility through restriction and the fulfillment of conditions"6, the freedom of contract theory "emphasises the utility of the right to incorporate and the freedom of choice of the incorporators under a liberal economy state concerned with facilitating rather than restricting business."7 This

  1. Contract - Business & Company Law

    Case - In the supreme court in design firm V restaurant chain owner (1999) NY, USA' a design firm agreed to provide consulting services for a restaurant chain owner. About six months later-although the firm still had not been paid, the owner requested additional services.

  2. Law for Business Summative assessment

    had enjoyed three months use of the car I would advise Sharon Dim that the TV would have to be returned to its true owner, and that she can if she wishes bring action against the shopkeeper for damages for breach as to title implied by s 12 of the Act.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work