Memorandum clause naming agents did not create an unalterable obligation, and injunctions cannot enforce personal service contracts.
A memorandum clause naming agents did not create an unalterable constitutional obligation binding the company, but only a management arrangement for appointment on stated terms. The memorandum was not enforceable as a third-party contract merely because the agents were named, and it could not compel the company to continue a pre-incorporation arrangement. The clause was also held not to extend to the present members of the agency firm on the facts. Injunctive relief was refused because it would in substance enforce a contract of personal service, which the court would not specifically enforce.
Issues: Whether clause 6 of the memorandum of association created an essential and unalterable condition of the company's constitution so as to prevent dismissal of the agents, and whether the plaintiff could obtain an injunction to restrain the company from acting on the impugned resolutions.
Analysis: Clause 6 was held to be, at most, a management arrangement for appointing agents on stated terms of remuneration, not an essential constitutional condition of the company. The memorandum of association did not operate as a contract with a third party merely because the agents were named in it, and the company could not be compelled to enter into or continue a pre-arranged contract made before incorporation. On its true construction, the clause did not cover the present members of the agency firm, who were not shown to be members of the original firm contemplated by the memorandum. In any event, an injunction that would prevent dismissal of the agents would amount to enforcement of a contract of personal service, which the Court would not specifically enforce.
Conclusion: The claim failed; the company was entitled to dismiss the agents, and the injunction was refused.
Final Conclusion: The appeal was not maintainable on the plaintiff's construction of the memorandum or on the relief sought, and the dismissal of the suit was upheld.
Ratio Decidendi: A memorandum clause naming agents does not, by itself, create an unalterable constitutional obligation or a contract enforceable at the instance of a minority shareholder, and the Court will not grant injunctive relief whose effect is to compel specific performance of personal service.
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