Implied Contract in Company Articles: declaration of managing director granted, but injunctive enforcement of personal service refused.

An implied contract arising from company articles can be established where an officer accepts office, acquires qualifying shares, performs the role and is remunerated under the articles; on those facts the plaintiff was entitled to a declaration that he was Managing Director. However, contracts of personal service or continuous managerial duties, particularly those effectively extending beyond three years or dependent on the parties' volition, are unsuitable for specific enforcement; where damages provide an adequate remedy and public policy bars forcing an unwilling principal to accept an agent, injunctive relief must be refused. Appeals dismissed on those grounds.

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Issues: (i) Whether an implied contract arose between the plaintiff and the company on the terms of Article 101 entitling the plaintiff to a declaration that he was Managing Director; (ii) Whether the plaintiff was entitled to an injunction restraining the company from preventing him from acting as Managing Director.

Issue (i): Whether an implied contract was proved by the plaintiff on the terms of Article 101.

Analysis: The plaintiff applied for and was allotted the requisite shares, acted as Managing Director for an extended period, and was remunerated in accordance with Article 101. Established authorities permit an implied contract to be inferred from the conduct of the parties where a person accepts and acts under articles and is remunerated accordingly. The facts demonstrate acts and circumstances sufficient to establish an agreement embodied in the articles as between the company and the plaintiff.

Conclusion: The plaintiff proved an implied contract on the terms of Article 101 and is entitled to the declaration that he was Managing Director.

Issue (ii): Whether an injunction should issue to restrain the company from preventing the plaintiff from acting as Managing Director.

Analysis: Contracts involving personal service or continuous duties extending beyond three years, and contracts dependent on the volition of the parties, are not appropriate subjects for specific enforcement. Where an adequate remedy in damages exists and public policy precludes forcing an unwilling principal to accept a personal agent, injunctive relief is inappropriate. The nature of the managerial office, the continuous character of the obligation, and the possibility of amendment of articles by shareholders render specific enforcement unsuitable in this case.

Conclusion: The injunction should not be granted; the plaintiff is not entitled to injunctive relief.

Final Conclusion: The decision grants the plaintiff a declaration of his status as Managing Director based on an implied contract but refuses injunctive relief; the appeals are therefore dismissed.

Ratio Decidendi: An implied contract between a company and an officer may be established by the officer's acceptance of office, acquisition of qualifying shares, and performance under the articles; however, specific enforcement by injunction is not available for contracts of personal service or continuous duties extending beyond three years where damages constitute an adequate remedy.

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