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Company Law

Company Law (11th edn)

Alan Dignam and John Lowry
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date: 30 November 2023

p. 25712. The constitution of the company: dealing with outsiderslocked

p. 25712. The constitution of the company: dealing with outsiderslocked

  • Alan DignamAlan DignamProfessor of Corporate Law, Queen Mary, University of London
  •  and John LowryJohn LowryEmeritus Professor of Commercial Law, University College London and Visiting Professor of Commercial Law, University of Hong Kong


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.

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