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Case

Result

Case Facts Held

A nadvertisement

with element

of

reward is a

public offer .

Carlill v

Carbolic

Smoke

Ball Co

[1893]

An advert placed for'smoke

balls' to prevent influenza.

offered to pay £100 if

anyonecontracted influenza after

using the ball. Deposited

£1000 with the Alliance!ank to show their

sincerity

in the matter. "he plaintiff bought one of the balls but

contracted influenza

she was entitled to recover as

(a) "he deposit of money showed

an

intention to be bound therefore the

advert was an offer#

(b) $t was possible to make an offer

to the world at large which is

accepted by anyone who buys asmoke%ball#

(c) "he offer of protection would

cover the period of use# and

(d) "he buying and using of the

smoke%ball amounted to acceptance.

Acceptance of

offer has to be

communicated.

R v Clarke

[1927]

"he &overnment offered a

reward for information

leading to the arrest ofcertain

murderers and a pardon to

anaccomplice who gave the

information. larke saw

the proclamation. (e gave

information which led to

theconviction of themurderers.

(e admitted that his only

ob)ect in doing so was toclear

himself of a charge of

murder and that he had no

intention

of claiming the reward at

thattime. (e sued the rown

for

the reward

"he court dismissed the case. "here

cannot be assent without knowledge

of the offer# and ignorance of theoffer is the same thing whether it is

due to never hearing of it or

forgetting it after hearing.*

Case Case Facts Held

AA +, A-- http://www.myaccablog.tk

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Reslt

/evocation hasto be

communicated.

B!r"e #

$eo" #a"

[188%]

An offer made on 1st

ctober $n ardiff2. laimant in

3ew 4ork2 received it on11th 5 send acceptance atonce. $n the main time the

defendant change his

mind

and sent a letter ofrevocation

on 6th ct. /evocation

letter reached on 17th ct.

"he revocation was not complete

until it had been communicated tothe offeree. "his was on 17th

ctober. $n the main time however the offer had been accepted. As aresult the revocation was ineffective

5 the contract did e8ist. "he

defendant was therefore liable

under the contract.

./evocation

can be

communicated

by a reliable

source.

&icki"so"v &odds

[187']

Dodds offered to sell hishouse to Dickinson the

offer being open until 9am

+riday.

n "hursday Dodds sold

thehouse to Allan. Dickinson

was told of the sale by

!errythe estate agent and he

delivered an acceptance before 9am +riday.

As the laimant knew that thedefendant was no longer in a

positionto sell the property to him the

defendant had drawn his offer

validly. $t was impossible

thereforeto say there was ever that e8istence

of the same mind between the two

parties which is essential in point of law to the making of an agreement.

ffer does not

laps with death

of offeree andremains valid

if

considerationis

being made.

rri"to"

v

rri"to"

[19*2]

A father bought a house on

mortgage for his son and

daughter%in%law and promised them that if they

paid off the mortgage they

could have thehouse. "hey began to do

this but before they hadfinished paying the fatherdied. (is widow claimed

the house.

"he father's promise was a

unilateral

contract % a promise of the house inreturn for their act of paying the

installments. $t could not be

revoked by him once the couple entered on

performance of the act. "he couplewas entitled to continue paying theinstallments and claim the house

when the mortgage has been fully

paid off.

Case Case Facts Held


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Reslt

A ounter

ffer /evokesthe original

offer.

H!de v

+re"c,

[18-%]

.: ;une < offered to sell

hisestate to ( for £1000# (

offered £970 => ;une <re)ected ('s offer =9 ;une(

offered £1000. < refused

to

sell and ( sued for breachof contract

(eld that if the defendant's offer

to sell for £1000 had beenunconditionally accepted there

would have been a bindingcontract# instead the plaintiff made an offer of his own of £970

and thereby re)ected the offer

previously made by the defendant.

$t was not afterwards competentfor the plaintiff to revive the

proposal of the defendant by

tendering an acceptance of it# andthat therefore there e8isted no

obligation of any sort between the

parties.

?roducts ondisplay are

only an

invitation to

treat and notan offer.

Fis,er v

Bell [19'%]

A shopkeeper displayed aflick knife with a price tag

in the window. "he

/estriction of ffensive

<eapons Act 1979 made itan offence to 'offer for sale'

a 'flick knife'. "he

shopkeeper was prosecutedin the magistrates' court

"he knife had not in law been'offered for sale. According to the

law of contract the display of an

article with a price on it in a shop

window is merely an invitation totreat. $t is in no sense an offer for

sale the acceptance of which

constitutes a contract.

An ffer

must be

distinguishedfrom a mere

supply of

information

Harve! v

Face!

[1893]

"he plaintiff sent a

telegram

to the defendant to sell property. "elegraph lowest

cash price. "he defendant

reply was @lowest cash

priceis £900. "he plaintiff

telegraphed @we agree to

buy B.. for £900 asked by

you.

$t was held that the defendantCs

telegram was not an offer but

simply an indication of minimum price the defendant would want.

Case

Reslt

Case Facts Held


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An

advertisement

is only aninvitation to

treat and notan offer.

Harris v

.ickerso"

[1873]

Auction of sale of furniture

was advertised in a

newspaper ondon broker saw the advertisement and travel to ondon to

attendthe sale the items had beenwithdrawn from the sale

before he arrived he claimed

that his action of attending

the auction amounted to anacceptance of an offer as

result he claimed that

contract has been breechedand sued for damages.

$t was not an

offer as it was

notclear definite or

uneEuivocalfromthe

advertisement

that the

auctioneerwanted to sell

the items of

furniture to the broker the

auctioneer had

no intention to be

bound to this

broker it was amere

statement of

intention.

Acceptance

is valid if sent in time

by any moreunlesse8clusively

specified.

.

/ates

bildi"s v

R 0

lle!" So"s

[197*]

fferor asked for the offer

to be accepted by registered post the offeree accepted the

by an ordinary letter whicharrived promptly

"he offeror had

suffered nodisadvantage in

a way that theoffer had beenaccepted as the

offeror did not

put a condition

specifying thatthe acceptance

could only be

made byregistered

post the

acceptance wasvalid.

-ilence doesnot amount to

Felt,ose

v

+ wrote to his nephewoffering to buy the nephews horse for £F0.17

$t was held thatthere was no


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acceptance. Bi"dle!

[18'3]

and adding

@if $ hear no more abouthim $ will consider the

horse mine. "he nephew

never replied.

contract the

uncle had noright to impose

upon the nephew

to sell

his horse. "henephew had not

given anywritten proof.

Acceptancemust be

communicated

throughauthorized

person.

oell v

$ee [19%8]

"he plaintiff applied for a )ob as headmaster 5 the

school managers decided

to appoint him. ne of them acting without

authority told the plaintiff

he had been accepted.ater the managers

appointed someone else.

"he plaintiff sued allegingthat by breach of a

contract to employ him

"here was nocontract as there

had been no

authorisedcommunication

of intention to

contract on the part of the

body that is the

managersalleged to be a

party to the

contract.

?ostal /uleG

A letter of

4dams v

$i"dsell

2 Se5t6 "he defendant

wrote to the plaintiff

A binding

contract was


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acceptance

once postedis deemed

accepted.

(1818) offering to sell goods

asking for a reply *in thecourse of post*

* Se5t. "he plaintiff

received

the letter and sent a letter of acceptance.

9 Se5t. "he defendantreceived the plaintiff's

acceptance bt o" 8

Se5t

had sold the goods to athird party.

made

when the plaintiff posted

the letter

of acceptance on

7 -ept so thedefendant was in

breach of contract.

,e ostal Rle

H $f

acceptance by post has been

reEuested or

where it is anappropriate and

reasonablemeans ofcommunication

between parties

acceptance is

complete as soon as the

acceptance is

posted,even if the letter

is delayed,

destroyed or lostin the post so

that it never

reaches theofferor.

Case

Reslt

Case Facts Held


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onsideratio

nG

?rice paid byeach party to

the contractfor the other partyCs

promise.

Crrie v

isa [187*]

onsideratio

n need not

be adeEuatesatisfactory2 but must be

valuable

beneficial2.

,omas v

,omas

[18-2]

A promise to convey a house to a

widow on her promise to pay

£1.00 rent p.a. and keep the housein repair was binding

?erformanceof e8isting

legal

obligationdoes not

amount toconsideratio

n.

Colli"s v

ode:or!

[1831]

A witness legally reEuiredto attend the court was

promised payment if he

would attend the court andgive evidence. (e attended

court and sued for the promise

(e had not provided considerationas he was legally obliged to attend

under the summon <ritten

command to a person to appear incourt.2

?erformanceof e8isting

Stilk v

!rick

"wo out of eleven sailorsdeserted a ship. "he

As the sailors were already bound by their contract to sail


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duty doest

not amountto

consideratio

n.

[18%9] captain promised to pay

the remaining crew e8tramoney if they sailed the

ship back but later

refused to pay

back and to meet such

emergencies of the voyage promising to sail back was not

valid consideration. "hus the

captain did not have to pay the

e8tra money.

ontract

holds if

work

is done intime and

both parties

take practical

benefit from

it.

+illiams v

Ro::e!

(199%)

/offey had a contract to

refurbish a block of flats %

sub%contracted the work

to <illiams % work begun% <illiams realized the

fact that he

underestimated the costof the work and was in

financial difficulties.

/offey to avoid foul of a penalty clause in his main

contract with the owner2

agreed to pay <illiamsan e8tra payment per flat.

<illiam did not receive

full payment H <ork

stopped /offey arguedthat <illiams was only

doing what he was

contractually bound to do

and so had not providedconsideration.

(eld that where a party to an

e8isting contract later agrees

to pay an e8tra *bonus* in

order to ensure that the other party performs his obligations

under the contract then that

agreement is binding if the party agreeing to pay the

bonus has thereby obtained

some new practical advantageor avoided a disadvantage.

?erformance

beyond

e8isting dutyamounts to

consideratio

n.

Hartle! v

o"so"b!

[18*7]

A high number of desertions

from a merchant ship

rendered the vesselunseeworthy undermanned

since e8tra pay was offer to

the crew if they remainloyal

"he promise of e8tra money was

recoverable by seaman who

remained loyal since they werenow working in a dangerous

situation they were doing more

than reEuired in there originalcontract2

?astconsideratio

Re c4rdle

[19*1]

A wife and her threegrown%up children lived

$t was held that the promisewas unenforceable as all the


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n is no

consideration.

together in a house. "he

wife of one of the childrendid some decorating and

later the children

promised to pay her £,66

and they signed adocument to this effect.

work had been done before

the promise was made andwas therefore past

consideration

?rivity of

contractG

nly partiesto the

contract can

sue eachother.

eddle v

4tki"so"

[18'1]

"he claimantCs father and

father%in%law agreed with

each other to pay theclaimant £100 and £=00 in

consideration of his then

intended marriage and after the marriage had taken

place they confirm their

agreement in writing. £=00was not paid and the

claimant sued his

father%in%law

-on%in%law could not sue because

he had not provided

consideration.

?erformanceof an

e8isting

contractual

obligation issufficient

consideratio

n to supporta promise

from a third

party.

S,adell v

S,adell

[18'%]

promised his nephew Aan allowance if he would

marry his fiancIe ! $n

those days an agreement to

marry was legally binding2.

"he promise was binding eventhough A was already obliged to

marry !. A had provided

consideration for the uncleCs

promise as he was initially under a duty to fiancIe not to uncle but

by entering into the agreement

with the uncle he had put himself under an obligation to him too.

?innelCscaseG

Foakes v

Beer [188-]

Jrs !eer had obtained )udgment for a debt of £

"he interest was recoverable.?ayment 5 satisfaction of a


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A lesser sum

is not a goodconsideratio

n for a

higher sum.

=090K% against Dr +oakes

with interest whosubseEuently asked for time

to pay. -he agreed that she

smaller sum was not consideration

for the promise to accept thisamount in satisfaction of a debt

interest and cost a greater sum.

?ayment bycheEue gives

no benefit

over and

above payment in

cash a

lesser sum is

not a goodconsideratio

n for ahigher sum2.

& C

Bildi"s

Rees

[19'*]

"he ?s a small buildingcompany had completed

some work for Jr. /ees for

which he owed the company

£,6=. +or months thecompany which was in

severe financial difficulties

pressed for payment.

ventually Jrs. /ees whohad become aware of the

company's problemscontacted the company and

offered £F00 in full

settlement. -he added that if

the company refused thisoffer they would get

nothing. "he company

reluctantly accepted acheEue for £F00 *in

completion of the account*

and later sued for the balance.

$t was held that the company wasentitled to succeed. "he )udge was

of the view that it was not unfair

for the creditors to go back on

their word and claim the balanceas the debtor had acted un)ustly

by e8erting improper pressure.

Doctrine of

promissory

Ce"tral

$o"do"

$n 19F> the ?s granted a 99

year lease on a block of flats

$t was held that they were entitled

to recover this money as their


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is estoppelG

4ou cannote8ploit the

situation by

going back

against your own words

ro5ert!

rst $td6 v

Hi, rees

Hose $td

[19-7]

in ondon to the Ds at an

annual rent of £=700.!ecause of the outbreak of

war in 19F9 the Ds could

not get enough tenants and

in 19,0 the ?s agreed inwriting to reduce the rent to

£1=70. After the war in19,7 all the flats were

occupied and the ?s sued to

recover the arrears of rent as

fi8ed by the 19F> agreementfor the last two Euarters of

19,7.

promise to accept only half was

intended to apply during war conditions. ?s were estopped

from going back on their promise

and could not claim the full rent

for 19,0%,7.

"he doctriceof

promissory

estoppeldoes not

create a new

cause of

action wherenon e8isted

before.

Combe vCombe [

19*1]

A husband entered into acontract promising his wife

to pay £ 100.00 free of

income ta8 after their divorce. "he wife did not

apply to the court for a

maintenance order but

when the husband failed toimplement his promise she

sued to enforce the

agreement relying on his

promise and the doctrine of promissory estoppel.

"he wife was not a in appositionto enforce the agreement as she

lacked consideration on her part.

"he eEuitable doctrine did notcreate a new cause of action

where none e8isted before.

Agreements

between

erritt v

erritt

A husband separated from

his wife wrote and signed a

(usband promise was enforceable

the agreement having been made


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spouses

about to or already

separated are

legally

binding.

[197%] document stating that in

consideration of the wife paying off the outstanding

mortgage debt of £160 on

their matrimonial home

he would transfer thehouse into her sole

ownership. "he wifeimplemented her promise

but husband did not. (e

alleged that his promise

was a domestic relationnot giving rise to a legal

relation.

when the parties were not living

together courteously. A legalrelation is assumed where a

husband deserts his wife and an

agreement is concluded of the

ownership of the matrimonialhome occupied by the wife and

children.

A statement

of Euality based upon

which a

contract ismade as far

as buyer is

concerned

considered aterm.

Ba""erma"

v ,ite[1977]

A buyer of hops asked by

the seller whether sulphur had been used in the

treatment and added that if

it had he will not buy. "heseller assured him that

sulphur had not been used.

-ulphur had been used.

"he court decided that the sulphur

was a vital part of the contract.Around which the whole deal

revolved it was a term.

An assertion

made by person whois a layman

for those

goods being

sold is notconsidered a

term.

;scar

C,ess $td6v +illiams

[19*7]

<illiam on selling a car to

the claimant company of car dealers asserted that it was a19,6 model. "he

registration book appeared

to confirm this statement

but it had been altered bysome previous owner and

the car was infect a 19F9

model

"he statement was in innocent

misrepresentation but not a termof the contract. "he seller whowas not a car dealer with

e8perience knowledge did not

intend to be bound contractually

by his statement concerning theage of the vehicle.

,e

oorcock

A wharf dock2 owner madean agreement to permit a

"he court implied a term into theagreement that the river bottom


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case [1889] ship owner to unload his

ship at the dock the shipwas damaged when at low

tied it was grounded at the

bottom of the river on a

hard ridge.

would be reasonably safe. Such

implied terms are based on the presumed but unexpressed

intention of the parties.

ontract is

termed void

on breach of a condition.

ossard v

S5iers

[187']

A soprano Jadame

?oussard agreed to sign a

series of opera for -piersshe failed to appear on the

opening night and was

refused for her services for her subseEuent nights she

sued for the breach of

contract.

"he obligation to appear on the

opening night was a condition and

since madame ?oussard was in breach of this condition -piers

was entitled to treat the contract

has at an end.

!reach of awarranty

does not

make the

contractvoid.

Bitte"i v

!e [187']

A tanner !itteni who addedto sign in a series of

concerts and to attend : days

of rehearsals

beforehand failed to appear for the first , days of

rehearsal &ye in

conseEuence refused !itteniservices for the balance of

the rehearsal and performances !itteni suedfor the breach of contract.

"he obligation to appear in therehearsal was a mere warranty and

!itteni breach could not be treated

as an end of the contract. &ye was

accordingly in the breach of contract when he refused !etteni

services for the remainder of the

contract.

A non

serious

breach of aninnominate

term can

only result in

claim for damages.

Ha"sa

.ord

[197']

An e8clusion

clause;lle! v

arlboro

A notice in a hotel room

e8cluded liability for loss or

"his was ineffective because the

contract for accommodation had


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cannot be

introducedinto contract

after it has

been made.

, cort

[19-9]

damage to guest property. been made at the reception desk.

nly naturallosses

reasonably

foreseeable

by a bystander

can be

claimed for.

Hadle! v

Ba<e"dale

[18*-]

A carrier was given amill%shaft to deliver to a

plant manufacturer as a

model for making a new

shaft the carrier delayed indelivery and unknown to

him the mill stood idle

during the period of delay.

(e was not liable for the loss of profit and the rule was formulated

as followsG

"he loss should be such as

may fairly and reasonably beconsidered either arising

naturally from the breach of

contract or as may reasonably

be supposed to have been incontemplation of both parties

at the time they made thecontract.There are two types of loss for

which damages may be

recovered:General damage normal loss.

Special damages abnormal

loss.

A company

is a separate

legal entityhaving its

own assetsand

liabilities.

Salmo" v

Salmo"

com5a"!$td6 [1897]

-almon had been in the boot

and leather business for

some time together withother family members he

sold the old business to hisnewly formed td.

company. ?ayment was in

form of cash shares anddebentures when the

company was eventually

winded up it was agreed

that -almon and thecompany was the same and

he could not be the creditor of his own so his debentureswould not have any effect.

(ouse of lord held that since there

was no fraud involved his

debentures were valid thecompany was properly constituted

and therefore it was a separatelegal personality from -almon.

A companyis a separate

$ee v $ee=s

4ir

An aerial crops spraying business in which Jr. ee

Although he was ma)ority shareholder and the sole working


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legal entity. :armi"

$td6 [19'%]

was a ma)ority shareholder

and was the sole workingdirector was killed while

piloting the air craft.

director of the company he and

the company separate legal persons and therefore he could

also be and employee of it for the

purpose of relevant statute with

rights against it when killed in anaccident in the course of his

employment.

A sham

company isalso liable

along with

the relatedviolator.

0o"es v

$i5ma"

[19'2]

agreed to sell some land

to ; than changed hismind and in order to evade

specific performance sold

the land to a company of which he was a controlling

member.

"he company was sham and

specific performance e8tended notonly to but also to the company.

ourt is not

free to thisregard the

principle of

-alomon v

-alomonunless

carefully

watched.

4dams v

Ca5e

i"dstries

[199%]

ape an nglish registered

company was involved inmining asbestosa form of

mineral2 in south Africa and

marketing it world wide to

various subsidiaries one of its marketing subsidiaries

? a company

incorporated and carryingon business in the L.- had a

court )udgment against it.

$t was unsuccessfully argued that

the veil should be lifted betweenthe companies so as to enabled the

)udgement to be enforced against

cape.

Fort"m

aso" $td6

v Fort"m

$td6 [199*]

"he claimant a well known

store in ?iccadilly ondon bought an action in the tort

of passing off against the

defendant. "he defendant

carried on business as animporter of low price to

goods from (ong Mong and

hina and then e8ported to

urope. "he defendant didnot apply its name to the

goods themselves

"here was no evidence that any

costumer of the claimant storewould buy the defendants good

thinking they were the claimants

therefore the action failed.

Any contract

not4s,br!

Raila!s

"he ob)ects clause of the

company set out purpose of

"he contract was ultra virus and

beyond the capacity of the


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authorized

by theob)ects

clause of a

company is

termed ultravirus.

Carriae v

Ric,e

[187*]

the company as the making

and selling of railwaycarriages. "he company

entered into a contract to

purchase a concession for

constructing a railway.

company.

+ailure of

substratum

may result inwinding up

of company.

erma"

date co::ee

Co6 [1882]

"here was a failure to carry

out the ob)ect of making

coffee from dates by meansof a &erman patent

although the company did

manufacture it with a-wedish patent2.

"he company would be wound

up.

"he articlesin all

respects areenforceable

by company

against its

members.

Hickma" v>e"t [192%]

"he o.Cs articles includeda clause to the effect that all

disputes between thecompany 5 its members

were to be referred to

arbitration. A member

brought court proceedingsagainst the o.

"he proceedings were stayed. "heompany could enforce the

arbitration clause against amember.

An alteration

of articles of

associationcan be made

in the best

interest of the

company.

ree",al,

v 4lder"e

Ci"emas[19*%]

"he issue was the removal

from the articles of the

membersC right of firstrefusal of any shares which

a member might wish to

transfer# the ma)ority wishto make the change in order

to admit an outsider to

membership in the interest

of the company.

"he benefit to the company as

whole held to be a benefit which

any individual hypotheticalmember of the company could

en)oy directly or through the

company 5 not merely a benefitto the ma)ority of the members

only.

An alteration

of articles of Sidebottom

b >ers,a

"he alteration was to e8pel

a member who carried on a

"he alteration was held valid.


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association

to e8pel amember in

the best

interest of

the companycan be made

withcompensatio

n.

leese Co6

[192%]

business completely with

the company.

ompany

has the

power toalter its

AA with a

retrospectiveeffect.

4lee" v

old Ree:s

[19%%]

N held fully paid 5 partly

paid%up capital in the

company. "he o.Cs articles provided for a lien a right

over another!s property to

protect a debt charged onthat property.2 for all debts

5 liabilities of any member

upon all partly paid sharesheld by the member. "he

o. by special resolution

altered its articles so that the

lien was available on fully paid%up shares as well.

$t was held that the o. had the

power to alter its articles by

e8tending the lien to fully paidshares. Alteration to the articles is

only sub)ect to the alteration by

-9 A 1967. /ights in the articlesare limited as to their duration by

the articles which confer them.

laim can be

made on breach of aservice

agreement

due to

alteration of the articles.

Sot,

Fo"driesltd6 v

S,irla

[19-%]

A managing director was

appointed under contractwith a company for tenyears but after the articles

had been changed

empowering his removal as

director he was dismissed.

"he court awarded them damages

for wrongful dismissal since thealteration of the articles althougheffective constituted a breach of

their contract of service# it was

contrary to the agreement that he

should serve for ten years which became impossible when he lost

their directorship.

/aising-hare

Cleme"s v

Cleme"s

? held ,7O of the shares dheld 77O. D along with

"he fact revealed that the director with ma)ority shareholders were


17

8/14/2019 ACCA f4.pdf


apital to

dilute ashareholderC

s voting right

is an

improper purpose 5

shall not bevalidated.

Bros6 ltd

[197']

other directors decided to

increase the nominal sharecapital. A general meeting

was held for the issue. D

favoured ? showed

deterrence > alleged that the purpose of this was to dilute

her voting control below to=7O 5 therefore deprive of

her power to vote special

resolution.

raising share capital not with the

intension to favour all but thereason was to dilute the minority

voting control. "he directors were

miss using their power.

"he directorsowe no

general duty

to individualmembers.

ercival v

+ri,t

[19%2]

-ome -hareholders askedo.Cs secretary for any party

interested to buy their

shares H -hareholders thensold shares to hairman.

ater it was revealed that at

the time of negotiationdirectors were engaged with

a party for sale of shares at

a price which was

considered to be high of thecurrent deal. "he

shareholders wished to return

back.

"he director owe a fiduciary dutyto company but not to individual

shareholders so under no duty

does the director is liable to actfor the best interest of an

individual. o. could have sued

the director if any would havedone.

Directors

cannot attain

any benefit

from thereoffice by

breaching

their fiduciary

duties.

Cook v

&eeks [

191']

-hares of the railway o.

"2 were eEually divided on

its directors. "he company

got a contract. "hreedirectors of "2 were not

willing the o. to have the

contract. "hey formedanother company D2 )ust

because of getting a new

contract. "hese directorslater sold a plant by

ma)ority voting to D. thers

directors sued.

$t was held that Directors could

not retain benefits of the o. "2

to themselves. "he director could

not use their voting control to bring a loss to the minority.

Director cannot make

Real

(,asti")

/egal hasting2 ltd. owed acinema 5 wished to buy

$t was held that Directors usedtheir special knowledge to gain


18

8/14/2019 ACCA f4.pdf


profit from

there position as

directors

regardless of

their motivesor

conseEuences to the

company.

ltd6 v

lliver

[19-2]

two more cinemas 5 later

sell them all as goingconcern. !ut regal was not

in financial position to buy

the two cinemas. -ome

directors were not were notagree. /egal with some

directors formed another company real applied for

ma)ority shares managed

amount sold cinemas as

going concerns regal gotmore profit portion where as

co. got less.

hidden profits. $t was a breach of

duty. "hey were accountable for the profit made.

+iduciary

dutiessurvive even

after the

directorsleave the

company.

?&C v

Coole![1972]

olle was a director of $D.

A company wanted to givea contract to olle not to

$D. olle because of

having interest in thecontract resigned 5

accepted the contract in his

own capacity.

(e was in a breach of fiduciary

duty as he preferred to earn profitfor his own sake and acted against

the best interest of the company.

+iduciary duty e8ited even after his resign from the company.

A director

should not be allowed

to contractwith his owncompany.

4berdee"

Raila! v

Blaikie

[18*-]

o. ontracted for chair

from a claimant partnership.of which the director was a

member2. "he director wasinterested at both sides butcouldnCt bargain for the

company.

ompany was entitled for

avoiding the contract. 3o Euestionshould be raised for fairness K

unfairness of the contract.

A director is

made

personallyliable for

debts 5

liabilities if

he hascommitted

wrongfultrading.

rodce

arketi"

Co"sorti

m

$td6 [ 1989]

ompany traded

successfully for 9 years

built up an overdraft had acontinuing loss H iabilities

e8ceeded assets between

1960 H 6>2. $n +eb. 6>

directors recognizinge8pected liEuidation carried

on trading. -uffered lossdirectors were sued.

"he court reEuired the directors to

contribute for £ >7000K% in o.Cs

assets because being aware of thegoing concern problem trading

was carried on. <rongful attitude

observed.

A ompany

secretarya"orama

&evelo5me

o.Cs secretary of the

defendant ordered a

"he contract was binding since

hiring of cars was usual to the


19

8/14/2019 ACCA f4.pdf


within his

authority canmake

contracts

with third

parties on behalf of his

company.

"t v Fidelis

Fr"is,i"

[1971]

imousine 5 stated that it

was to be used in business but used personally.

-ecretary usually hired cars

in the past.

office of companyCs secretary.

"d o: Cases

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