UCL3612 Company Law I Tri 1, 2021/2022

Topic 4: Corporate Personality and Corporate Liability

Tutorial

1. Who has the authority to enter into contract on behalf of a company? How do
companies enter into agreement with third parties?

2. Read Royal British Bank v Turquand (1856) 6 E & B 327 for discussion. What
are the exceptions to this rule?

3. Under its Constitution, the Board of Directors of Candy Sdn. Bhd. may only
make purchases worth more than RM10,000.00 with the approval of the general
meeting passed by special resolution. Without obtaining such consent the Board
entered into an agreement with Lucy Sdn. Bhd. for the purchase of a machine
worth RM15,000.00. Subsequently this matter was raised at the general meeting
by a shareholder. At this meeting the company voted to revoke this purchase on
the ground that the Board had no authority to enter into this agreement. There
was no allegation of mala fides on the part of the Board. Advise Lucy Sdn. Bhd.

4. Shark is the Purchasing Officer in Marina Bhd., a company which operates

fishing vessels. It is the practice among such companies not to make purchases
without the written consent of the Board of Directors. Shark signed an
agreement with Oceania Bhd. for the purchase of a vessel. This was not
disclosed to the Board of Marina Bhd. In fact, Shark had told Oceania Bhd. that
the Board had orally consented to the said purchase and that he had the authority
to sign the sale and purchase agreement. Marina Bhd. does not wish to be bound
by the agreement. Advise Marina Bhd.