a) The rule established in the case of Royal British Bank vs.

Turquand (1856) ALLER 435, commonly

known as the "Rule in Turquand's Case," is a significant principle in company law. The rule states that a
person dealing with a company is entitled to presume that all the internal procedures of the company
have been complied with. This presumption of regularity protects innocent outsiders who engage in
commercial transactions with the company.

The relevance of the rule lies in its practicality and the need for certainty in business transactions.
Outsiders, such as customers, suppliers, or other business partners, often rely on the outward
appearance and representations made by a company's officers or agents. They do not have access to the
company's internal workings or knowledge of its internal procedures. Therefore, it would be impractical
and burdensome to expect outsiders to investigate and verify every internal action of a company before
entering into transactions.

The rule in Turquand's Case provides a solution by allowing outsiders to rely on the apparent authority
of the company's directors or officers. If a director acts beyond their powers or exceeds the company's
internal procedures, the outsider is protected from any negative consequences arising from the
director's unauthorized actions. The outsider can still enforce the transaction against the company, even
if the director's actions were not in compliance with the company's internal rules.

The rule in Turquand's Case promotes commercial certainty and facilitates business transactions by
allowing outsiders to transact with companies based on their reasonable expectations of authority. It
recognizes that outsiders should not be penalized for the internal irregularities or unauthorized acts of a
company's officers.

b) While the rule in Turquand's Case provides important protection to outsiders, there are certain
exceptions recognized by the courts. These exceptions limit the application of the rule in specific
circumstances:

1. Knowledge of irregularity: If the outsider has actual knowledge of the irregularity or lack of authority
of the company's director or officer, they cannot rely on the rule. In such cases, the outsider will be
deemed to have notice of the irregularity and will be bound by it.

2. Ultra vires acts: The rule does not protect an outsider in cases where the director's actions are
completely outside the company's authorized scope of activities. If the transaction goes beyond the
company's legal capacity, the outsider cannot claim protection under the rule.
3. Constructive notice: If the irregularity is so apparent that a reasonable person would have noticed it,
the outsider cannot rely on the rule. The court may impute constructive notice to the outsider, holding
them accountable for not investigating or inquiring further.

4. Collusion or fraud: If the outsider is colluding with the director or is aware of fraudulent activities,
they cannot claim protection under the rule. The rule does not shield those who knowingly participate in
fraudulent transactions or misrepresentations.

These exceptions serve to balance the protection of innocent outsiders with the need to prevent abuse
or misconduct. They ensure that the rule in Turquand's Case is not exploited by those who have actual
knowledge of irregularities or engage in fraudulent dealings.

It is important to note that the applicability of these exceptions may vary depending on the jurisdiction
and specific facts of each case. Legal advice should be sought for a comprehensive understanding of the
exceptions in a particular jurisdiction.