When a person transacts with a company on matters which is beyond the power of the company, the person will be governed by the Doctrine of
Constructive Notice
The Memorandum and Articles of Association are public documents filed with the Registrar of Companies. Under the doctrine of constructive notice, every person dealing with the company is presumed to have read them and to know the company's powers and the limits on its officers' authority.
So when a person transacts on matters beyond the company's powers (ultra vires the Memorandum), they cannot plead ignorance. Such a transaction is void (Ashbury Railway Carriage and Iron Co. v. Riche, 1875) and the outsider must bear the consequences.
The doctrine of indoor management (Royal British Bank v. Turquand, 1856) protects outsiders only against internal irregularities in matters within the company's powers; it does not apply to acts beyond those powers. Management by exception is a management control principle, and self management is not a doctrine of company law.
Hence, Constructive Notice.
Similar Questions
The appropriate sequence of the formation of a company are in the following order :
Important Questions from The Companies Act
Arrange the following steps of incorporation of a new Limited Liability Partnership in proper sequence.
A. Reserve LLP Name
B. Preparation of Documents for Incorporation of LLP
C. Procure Digital Signature Certificate
D. LLP incorporation and DIN Application and apply for PAN and TAN
E. Drafting and filling LLP Agreement
Choose the correct answer from the options given below:- The maximum number of Partners in a Limited Liability Partnership can be :
- Which of the following is not true in the context of CSR?
- Which of the following provision of the Companies Act, 2013 identifies shares and debentures as a movable property?
- In which of the following case, the golden rule for framing prospectus was formulated by V.C. Kindersley?
A. Methodist Church v/s Union of India
B. R. v/s Registrar of Companies
C. New Brunswick Canada Railway Co. v/s Muggeridge
D. Jubilee Colton Mills Ltd. v/s Lewis
Choose the correct answer from the options given below:
