LAW 2505 Lecture Notes - Lecture 3: Apparent Authority, Ds 4, California State Route 1
23 May 2018
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COMPANY CONTRACS AND STATUTORY ASSUMPTIONS
Issue: Co wants to leave a c* (argue defective- eg agent’s authority); Person/ Co has
contracted with the company and wants to enforce it but the company successfully argued C*
is defective (statutory assumptions)
Step 1: a company contracts directly or indirectly
1. Legal power of individual to enter into
contracts (s 124)
2. With a common seal
a. 127(2) The seal is affixed to the doco and
the fixing is witnessed by 2 directors; or
a director and a secretary; or for a Pty Co
that has a sole director who is also the
sole secretary, by that director
3. Without a common seal (signature)
a. S 127(1) the doco is signed by 2 directors
of the company; or a director and a
secretary; or for a Pty Co that has a sole
director who is also the sole secretary, by
that director
4. In compliance with the procedure
in company's constitution
5. Must be approved/ authorised
o Need approval of either board of directors
or members at GM to enter the
transaction and execute the relevant
docos
o Don’t need approval of all parties to alter
constitution- only need a special
resolution
• in effect, members can have
terms of statutory contract
(s 140(1)(a) and (c) altered even
if they vote against it
• Unless expropriation of shares-
Gambotto req- see shares notes
o Act of a company is not invalid merely
because it is contrary to/ beyond objects,
restrictions or prohibitions in
constitution s 125(1) CA
Contracting indirectly via an agent
1. companies have the legal capacity and
powers of an individual- can contract via
agent (s 124)
2. Need actual or apparent/ ostensible
authority- If the company's agent acts
within his/ her authority, the company
will be bound by agent's actions
3. Actual authority
o company has actually
agreed (expressly or impliedly) that
the agent can act on its behalf
o Express actual authority arises
from the CA/ Co C*/ delegation by
board of Ds
o Implied actual authority is inferred
by the conduct of the parties and the
circumstances
• Position/office that a person
holds
• CEO/managing director –
given all the usual authority
associated with that
office: Hely-Hutchinson v
Brayhead Ltd [1968] 1 QB
549
• Single director, acting alone,
in a multi-director company
– fix, and witness the fixing
of, the seal
• Course of past dealings between
the company and agent +
acquiescence
• Custom or trade usage
• What is necessary or ordinarily
incidental to the express actual
authority
4. Apparent/ ostensible authority
o Where the company has not agreed
that the agent can act on the
opas ehalf, ut gies suh a
impression to an outsider
o Requirements (Crabtree
Vickers; Freeman & Lockyer)
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Issue: co wants to leave a c* (argue defective- eg agent"s authority); person/ co has contracted with the company and wants to enforce it but the company successfully argued c* is defective (statutory assumptions) Implied actual authority is inferred by the conduct of the parties and the circumstances: position/office that a person holds, ceo/managing director given all the usual authority associated with that office: hely-hutchinson v. Single director, acting alone, in a multi-director company. Is not bound to enquire whether acts of internal management have been regular: statutory assumptions in ss 128-129 ca. A person is entitled to make one or more of the assumptions of regularity in s 129. Ca when dealing with a company s 128(1: dealing(s) = negotiations or other steps in relation to a contemplated transaction soyfer v earlmaze [2000] nswsc 1068, can apply to a single transaction: story v advance bank australia.
