Agency and Authority - Apparent or Ostensible Authority - Protection of TP/Contractors/Outsiders
3 important questions on Agency and Authority - Apparent or Ostensible Authority - Protection of TP/Contractors/Outsiders
Mahony v East Holyford Mining Co Ltd (1875)
The indoor management rule is subject to the assumption that 'all those ordinary inquiries which mercantile men would, in the course of their business make...would have to be made on the part of the persons dealing with the company'.
It was held that, the rule could not be relied on because of failure to ask question that the court decided should have been asked.
It was held that, the rule could not be relied on because of failure to ask question that the court decided should have been asked.
Limitation to Indoor Management Rule
If a company did not give actual authority for the making of a contract, a person who, as a director of a company, took part in attempting to act for the company in making the contract, cannot rely on the indoor management rule.
Conditions to Satisfy Section 40
- A party dealing with the company
- Acted in good faith
- Not required to act reasonably to prove acted in good faith
- Subjective test to determine bad faith
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