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Cover Company Law

6. Corporate capacity and liability  

This chapter focuses on the complex rules regarding who can act on behalf of the company, and how liability can be imposed on the company for the actions of others. A company can enter into a contract by affixing its common seal to the contract, by complying with the rules in ss 44(2)–(8) of the Companies Act 2006 (CA 2006), or by a person acting under the company’s express or implied authority. Section 39 of the CA 2006 provides that a contract cannot be invalidated on the ground that the contract is outside the scope of the company’s capacity. Meanwhile, section 40 of the CA 2006 provides that the power of the directors to bind the company, or authorize others to do so, is free of any limitation under the company’s constitution. The chapter then considers the four methods of liability: personal liability, strict liability, vicarious liability, and liability imposed via attribution.


Cover Concentrate Questions and Answers Company Law

8. Corporate Liability: Contracts, Torts, and Crimes  

The Concentrate Questions and Answers series offers the best preparation for tackling exam questions and coursework. Each book includes typical questions, suggested answers with commentary, illustrative diagrams, guidance on how to develop your answer, suggestions for further reading, and advice on exams and coursework. This chapter examines company contracts including: pre-incorporation contracts, the company’s capacity, directors’ authority, and restrictions on the powers of directors to bind the company. The chapter also considers liability of the company for tortious and criminal acts, including vicarious liability; attribution; and the particular area of corporate manslaughter and the Corporate Manslaughter and Corporate Homicide Act 2007.


Cover Introduction to Company Law

8. Liability and Enforcement  

The effective enforcement of law requires that liability be appropriately allocated, that those with the appropriate incentives be in a position to enforce the liabilities thus created and that the sanctions available be effective. Otherwise, the substantive law may be ineffective in practice.This chapter examines these issues in relation to companies and individuals connected to companies in three contexts: civil law (mainly contract and tort), criminal law, and regulatory rules. Although much of the background law is of general application, it applies in a particular way to companies and individuals engaged in corporate activities.