Exceptions in turquands case, Business Law and Ethics


The rule in Turquand's case will not apply if:

i.The person suing the company is in fact an insider, such as a director of the company:

Howard v Patent Ivory Co (82). Such a person has access to the company's documents from which he may discover the lack of authority. Exceptionally, he may succeed against the company if he proves that he was a recently-appointed director and had not fully acquainted himself with the internal procedures of the company.

ii.  The company's articles prescribed a special resolution which had not been passed, as illustrated by Irvine v Union Bank of Australia (83).

A special resolution is registerable under s.143 of the Companies Act and if it had been passed a copy thereof would have been delivered for registration and would have been found among the company's documents at the companies registry. Its absence shall have warned the outsider that it had not been passed.

v. There were special circumstances which should have put the outsider on inquiry: Underwood Ltd v Bank of Liverpool (case No 5); Liggett v Barclays Bank (84).

vi. The transaction is ultra vires the company, since a company's agent cannot have authority to transact a business which the company itself lacks capacity to transact.

vii. The transaction relates to the issue of a forged document, such as a forged share certificate issued by the secretary without the authority of the board, as illustrated by Ruben v Great Finggall Consolidated Ltd.

viii. Knowledge of irregularity: Liggett v Barclays Bank

vii As insider.

Posted Date: 1/12/2013 5:16:14 AM | Location : United States

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