chapter  3
9 Pages

Promoters and pre- incorporation contracts

The powers delegated to the directors are delegated to them collectively. It is open to the directors, of course, to subdelegate powers to individual directors or, indeed, to others. The company had two members, Breckland Ltd and Crompton Ltd. It had been agreed that Crompton Ltd would appoint two directors and Breckland Ltd one director. The appointment of a managing director will cease if he ceases to be a director. The principles of agency law dictate that an agent can only act within his actual or ostensible authority in binding the company. A director simply by virtue of holding the office of director has no implied authority as agent of the company to conclude contracts. The Court of Appeal held that since Richards was actually authorised to act for the company, the company was bound. In Turquand's case, the company's articles authorised the directors to borrow money if this had been sanctioned by ordinary resolution.