This chapter discusses the functioning of directors and their duties under common law and the Companies Act 2006. Topics covered include: the scope and nature of directors’ general duties; the duty to act within powers; the duty to promote the success of the company; the duty to exercise independent judgement; the duty to exercise reasonable care, skill and diligence; the duty to avoid conflicts of interest; the duty not to accept benefits from third parties; the duty to declare an interest in a proposed or existing transaction or arrangement; remedies for breach of general duties; relief from liability; ratification of acts of directors; relief from liability granted by the court; contracting out of liability; statutory rules requiring special notice or members’ approval for certain transactions; and secondary liability (liability of third parties associated with directors’ wrongs).
Chapter
8. Remedies for Maladministration of the Company
Chapter
10. The Law of Agency
This chapter begins by defining agency—the relationship which exists between the agent and the principal—and considers the legal relationships created between an agent, his principal, and a third party. It then discusses the different methods by which an agency relationship may be created. The chapter explains the extent of an agent’s authority, the power of an agent to bind his principal, and the rights and duties of an agent. The relationship between agent, principal, and third party is explored and the different rules relating to disclosed and undisclosed agencies. Finally, the termination of an agency relationship is considered and examples of different types of agencies highlighted.
Chapter
3. The law of treaties
This chapter examines the rules of international law governing the birth, the life, and the death of treaties. Treaties, a formal source of international law, are agreements in written form between States or international organizations that are subject to international law. A treaty falls under the definition of the Vienna Convention on the Law of Treaties (VCLT), no matter what form or title it may have. The most important factor is that it sets out obligations or entitlements under international law. The VCLT enumerates the rules governing the ‘birth’, ie the steps from the negotiation until the entry into force of the treaty; the ‘life’, ie the interpretation and application of the treaty; and its ‘demise’, ie its termination. The two fundamental tenets are, on the one hand, the principle ‘pacta sunt servanda’ and, on the other, the principle of contractual freedom of the parties.
Chapter
12. The creation of agency and the agent’s authority
Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter focuses on the creation of agency and its three main parties: the agent, the principal, and the third party. The primary purpose of the agent is to bring the principal and the third party into direct contractual relations, with the principal taking on the rights and liabilities created by the contracts, provided the agent had authority to act. The chapter looks at several kinds of agent’s authority, including actual authority, apparent authority, and usual authority, and also considers agency of necessity as well as cases where the principal may ratify a transaction.
Chapter
4. The creation of the agency relationship
This chapter considers the various methods by which a relationship of agency can be created, namely by agreement, by ratification, by operation of law (including agency by necessity), and agency arising due to estoppel. It should be noted that an agency relationship might be held to exist, even though the parties or one of the parties do not wish for it to exist, or have expressly declared that such a relationship does not exist. Equally, the fact that the parties describe themselves as ‘principal’ and ‘agent’ will not conclusively establish that a relationship of agency exists, and the courts will disregard such labels if the realities of the relationship indicate that it is not one of agency. An agency relationship can therefore be created consensually or non-consensually. The chapter also discusses preliminary issues such as the capacity of agent and principal, and the formalities needed to create a relationship of agency.
Chapter
5. The authority of the agent
This chapter explores the authority of the agent. It tackles the interplay of authority between an agent, a principal, and third parties, and the distinction between actual and apparent authorities. In most cases of apparent authority, the ‘principal’ makes a representation that the ‘agent’ has authority which the third party relies upon by entering into a contract. In certain circumstances, a person who acts in an emergency to preserve the property or interests of another may be treated as an agent of necessity regardless of the principal's absent consent. The chapter then overviews the impact of ratification on the rights and liabilities of third parties.
Chapter
5. Creation of agency, and the authority of the agent
D Fox, RJC Munday, B Soyer, AM Tettenborn, and PG Turner
This chapter focuses on the creation of the principal–agent relationship and the authority of the agency and the four ways of creating it: through an express or implied agreement between the principal and the agent; under the doctrine of apparent authority; by operation of law; and through ratification of an unauthorised agent’s acts by the principal. Agency arising out of agreement will always be consensual, but it need not be contractual. After explaining how the agency relationship is created, the chapter examines the authority of the agent such as actual authority, apparent authority, and usual authority.
Chapter
6. Directors’ Duties
This chapter examines the law on directors’ duties, as restated in the Companies Act 2006, other than the core duty of loyalty which is discussed in Chapter 2. It covers the duty of care, the duty to act within powers, the duty to exercise independent judgement, and, most importantly, the application of fiduciary duties to various types of conflict of interest. Many of the most interesting doctrinal questions about company law arise in this area and it is righly placed at the center of many company law courses. However, it may that other sets of rules, discussed in earlier chapters, are more important in practice in the regulation of internal company relations. In addition to the substantive law, the remedies available in respect of breaches are analysed, as is the freedom of shareholders to waive breaches of duty, both after and before the event.
