p. 23712. The constitution of the company: dealing with outsiders
- Alan DignamAlan DignamProfessor of Corporate Law, QC (Hon), School of Law, Queen Mary University of London and Honorary Member, 7 King’s Bench Walk Chambers
- and John LowryJohn LowryEmeritus Professor of Commercial Law, Faculty of Laws, UCL; Visiting Professor of Commercial Law, University of Hong Kong; and Honorary Fellow, Monash University
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter explores the legal aspects of transactions made with those outside the company (called outsiders or third parties), with emphasis on how they are determined to be legitimate and binding on the company. It also discusses the ultra vires doctrine and the three particular issues that make it a very tricky problem for the courts; the inclusion of the benefit of the company criterion to the ultra vires issue; the reform of ultra vires; and the application of the general principles of agency in determining whether the company is bound by a particular transaction. The chapter concludes by analysing reforms in the Companies Act 2006 concerning the authority of directors to bind the company or authorise others to do so.