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Corporate Capacity and authority, pre 2014, allied irish bank v ardmore …

- - - - limitations
        
        if put on inquiry - due to irregulaity
        
        AL Underwood v Bank of Liverpool if nature of transaction so unsual that 3rd party should have inquired further - payed company cheques into own account - placed bank on inquiry
        
        3rd party needs to have relied upon company's constiution or articles - rama corporation
        
        if of public record irvine special resolution
      - s 40 altered general authority of directors and registered persons - as authority regardless of constiution
        
        goes beyond turquand = board or registered person have authority irrespective of contents of company's constiution
      - operated pre 2014 - question of authority subject to internal management rule
      - Turquand joint directors authorised to borrow money, plaintiffs sought repayment - court liable to repay despite absence of ordinary resolution
        
        if constituiton prohibits certain transaction unless specified internal formalities complied with, 3rd party not obliged to ensure formalities satisfied
        
        exceptions
        
        if special resolution required (outsider can check if done) if person put inquiry by irregulairty
        
        Rolled Steel if have notice of irregularity can't rely on rule
        
        irregularity of public record
        
        irvine v union bank of australia borrowed above certain amount which require special resolution, bank constructive notice as no copy registered in companies office
        
        circumstances give rise - cox v dublin 3rd party must act in good faith
      - purpose
        
        business efficacy
        
        Acc Bank v McCann & Griffen Hogan J - director guaranteed loan facilities, lack of approval, minutes of meeting showed he was in attendant, signature forged - rule still applied despite forged document - company bound - forgery not exception to rule - declined to follow ruben approach in the UK
      - Morris v Kansen persons contracting with company and dealing in good faith may assume acts properly and duly performed - if director inposition where should know if necessary internal formalities done should have made inquiry
      - presumption of regularity
        
        Mahon v East Holyford
      - purpose to mitigate harshness of constructive notice on 3rd parties
      - statutory footing s 40(11)
      - motor race circuits debenture not countersigned, bank entitled to assume internal management correctly complied with
      - aib v ardmore studios 2 directors required to approve deals, no constructive notice of internal management procedure
    - - type of estoppel
        
        representation (permit agent act in way so appears person authority to enter contract for principal)
        
        may be tacit representation (failing to set record straight)ulster factors v entongeln power to issue cheques, defendant failed to tell plaintiff cheques need to be authorised by 2 signatures
        
        armagas representation can take various forms, most commonly permitting agent to act in a way
        
        kett v shannon look if representaion intended to convey and if it does convey
        
        by person with actual authority to manage business
        
        relied on representation or induced to enter contract
        
        no bar to capacity (no longer relavent to LTDs in Ireland)
      - facts - articles of company provided for appointment of managing director. not formally appointed. organised busines. - applied test - board knew acting as managing director and permitted him to do so - articles of association conferred full powers of management on boad, plaintiffs thought authorised by company to enter contracts
    - - denning - authority can be express or implied from conduct
  - - - registered persons. s. 39
        
        registered persons authority to enter transactions on behalf of company
        
        authorised by board
        
        notified to CRO
        
        formalities on how to appoint registered person
      - board of directors
      - powerful provision - s 40(1) - courtney
        
        pre 2014 act could only enter contracts on permitted delegated aurhotiy from memorandum and articles of association
      - limitations
        
        if exceed limitations in constiution
        
        director or connect person party to transaction
        
        ir requires to be exercised by resolution
- - - - defined parameters of company's objects
      - protect 3rd parties and investors
    - - failure to act intra vires may be an abuse of power
      - MJ Cummins lender not obliged to inquire purpose of borrowing where company has power to borrow under objects clause - in this case on notice ultra vires - not enforceable
  - - - DACs
        
        s 973 - DACs - validity of act can't be alled into question, but remains duty of directors -
        
        directors can still be held liable but can be aboslved by special resolution
        
        courtney - if can make connection with anything contained with DACs object not void
        
        can now be ratified 973(3) - but won't effect liability
        
        in interests of directors of DACs to have objects clauses drafted broadly
      - purpose is 3rd parties protect if didn't know breach objects clause
      - PLCs
        
        s 1012
        
        can do anything requieste, advantageous or incidential to faciltate state object
      - CLG
        
        1182 - retains it, but mitigated by 1183
  - - - parke v daily news payments to employees went beyond objects and didn't benefit company
      - Ashbury railway carriage v riche objects clause to build rail carts, contract to build railline -ultra vires - contract void - unratifiable
      - jon beaufort reaffirmed decision
    - - Cotman v Brougham - each class independent nad not to be read in conjunction with another
    - - Bell houses Ltd v City Walls propertiesif director honestly believed of benefit to main object could be extended
      - northern bank finance corp v quinn must be reasonable, guarantee given by company as security for director loan not ancillary to company's main business nor advantageous to the company
    - - what were the main objects german date coffee look at real object others treated as ancillary
    - - valid approach - noted in cotman v broughman
  - - - Hutton v West Cork Railway power to hire employees, borrow money, give security
      - PMPA Garages 1 member lent money, guarantee, PMPS sought to enforce - argued did benefit the related companies
    - - objects don't haveto be commercial - just matach what original incorporators thought
    - - old school
        
        if not in furtherance of objects or not benefiting company void
        
        introductions ltd v national provincial bank object of tourist services, power to borrow money, company owners changed, into pig breeding, didn't change constitution - borrowed money- invalid exercise of company power ultra vires
      - new school
        
        if power is ultra vires directors personally liable if company suffers a loss but outsider can still enforce
        
        rolled steel
- - - - either held by court or revert to members - mahony v east holyford
    - - burke clancy directors sought to borrow amount in excess of delegated borrowing powers
      - directors can chose to ratify these
    - - can obtian absolution bamford v bamford