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Chapter 22
22 Protecting 3rd Parties V Abuse
22 Protecting 3rd Parties V Abuse
of Directors’ Powers
of Directors’ Powers
• Directors with apparent authority
• Directors with apparent authority
(Freeman Lockyer )
(Freeman Lockyer )
• The indoor management rule
• The indoor management rule
(Turquand)
(Turquand)
2
Freeman Lockyer v Buckhurst Park
Freeman Lockyer v Buckhurst Park
Properties (Mangal) Ltd [1964]
Properties (Mangal) Ltd [1964]
• A had formed a company with another person,
• A had formed a company with another person,
and both were members of the board of
and both were members of the board of
directors. The aim of the company was to
directors. The aim of the company was to
acquire and develop certain land.
acquire and develop certain land.
• The development of the land was left to A who,
• The development of the land was left to A who,
with the knowledge of the board of directors,
with the knowledge of the board of directors,
acted as managing director despite the fact that
acted as managing director despite the fact that
he had never been formally appointed as such.
he had never been formally appointed as such.
A engaged (employ) a firm of architects to draw
A engaged (employ) a firm of architects to draw
up the plans and the architects later sued the
up the plans and the architects later sued the
company for payment of the fees for their work.
company for payment of the fees for their work.
3
• Issue: whether A has authority
• Issue: whether A has authority
from the company?
from the company?
4
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