Rule in foss v harbottle, Business Law and Ethics

RULE IN FOSS v HARBOTTLE:

 What has come to be recognized in company law as "the rule in Foss v Harbottle" is the decision of Vice-Chancellor Wigram in the case of Foss v Harbottle in which the facts, briefly, were as follows.

The plaintiffs, Foss and Turton, were shareholders in a company called The Victoria Park Co. which was formed by statute to buy land for use as a pleasure park. The defendants were the company's five directors and others.  The plaintiffs alleged that the defendants had defrauded the company in various ways, and in particular that certain of the defendants had sold land belonging to them to the company at an exorbitant price. They asked the court to order the defendants to make good the losses to the company and also sought the appointment of a receiver.

It was held that it was incompetent for the plaintiffs to bring such going on, the sole right to do so being that of the company in its corporate character.  The judge stated:

"In law the corporation and the aggregate members of the corporation are not the same thing for purposes like this; and the only question can be whether the facts alleged in this case justify a departure from the rule that, prima facie, would utilize that the corporation should sue in its own name and in its corporate character or in the name of someone whom the law has appointed to be its representative."

The judge eventually concluded that no departure from the rule was justified in the case before him.  The same rule was restated with more clarity by Lord Davey in Burland v Earle when he stated;

"In order to redress a wrong done to the company or to recover moneys or damages alleged to be due to the company, the action there should prima facie be brought by the company itself."

Posted Date: 1/15/2013 2:57:59 AM | Location : United States







Related Discussions:- Rule in foss v harbottle, Assignment Help, Ask Question on Rule in foss v harbottle, Get Answer, Expert's Help, Rule in foss v harbottle Discussions

Write discussion on Rule in foss v harbottle
Your posts are moderated
Related Questions
Articles of association: The memorandum of a company limited by shares or by guarantee must state that the liability of the company's members is limited. Hence the memorandum

Statutory Provisions:  i) Definition of "Prospectus" A prospectus is defined by S.2 as "any prospectus, notice, circular, advertisement or other invitation offering to the

Differences between Liquidators and receivers: There are also significant differences: (a)a liquidator has numerous statutory powers. A receiver must rely on the powers given

Legal Procedures: The court may order the examination in private or public (ie. open court) of an officer of a company in liquidation or of any person known or suspected to ha

As you think about the rights of workers enhanced by anti-discrimination laws, have society and organizations become more tolerant and competitive due to less discrimination in the

In entrepreneurship development, we have studied various aspects of Entrepreneurship Development, which will help in setting your own workshop. Though all the information has been

Article 3 - State Responsibilty Article 3. This article is about the Characterisation of an act of a State as Internationally wrongful. A local law that results into violatio

Effects or Consequences of Illegality Misdemeanour Or Illegality renders a contract unenforceable.  However the contract creates no rights and imposes no obligations at the pa

What are remedies available under equity law? Remedies available under equity law are as given below: • Exact performance (forced to execute task) • Injunction (stopped t

Scheme of Arrangement: The following sequence of action is necessary:  (a) application is made to the court (usually by the company itself) for an order that one or more me