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Good day sir,
A bit confused about how the company can enter into an ultra vires contract with its directors?
Also, is the director with whom the contract is made, liable if a member takes action against company for ultra vires? or only the authorising person?I’m not really sure here what your question is! Can you re-post it with names (Big Company, Jack a director, Bill a third party, and any other characters that may be involves)
OK?
Sorry for the terrible way of expressing. I got confused while reading the following paragraph in BPP Study Text, and thought it would be better to ask you.
Transaction with directors:
“The CA 2006 also applies when the company enters into a contract with one of its directors, or its holding company, or any person connected with such a director. Contracts made between the company and these parties ave voidable by the company if the director acts outside their capacity.
Whether or not the contract is avoided, the party and any authorising director are liable to repay any profit they made or make good any losses that result from such a contract.”
The question is, who will be liable for such an ultra vires contract, the company or the the parties with whom the contract is made if a member takes action to stop such a contract?
Sir, it seems you have mistakenly closed the thread “Constitution as a supplement to contract” without answering. I would be so thankful if you’ll answer that too. Sorry for mentioning it here.
The contract is a contract between Big Company and Jack and the situation is where Jack, in his capacity as a director puts Big Company into a contract with Jack himself (or with any one of Jack’s connected persons)
On discovery, the company can avoid the contract or, if it wishes, may go ahead with the contract but, in either situation, any gains made by Jack (or his connected persons as appropriate) is repayable to Big Company
You ask about “the company or the the parties with whom the contract is made”
You’ve missed the point! The contract is between Big Company and Jack the director
Better?
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