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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the contract for introducing a financier and earning commission was ultra vires the company's memorandum of association.
Analysis: The memorandum contained express objects enabling the company to carry on business ancillary to its main development business, to turn to account and deal with its assets, and to do things incidental or conducive to its objects. The transaction was not treated as a new speculative business, but as an isolated commercial arrangement connected with the company's financing needs and its development activities. The court held that the words giving the directors power to form the opinion that a business was advantageous in connection with or ancillary to the company's business were effective, and that a bona fide decision by the delegated decision-maker could satisfy that requirement. On that construction, the arrangement fell within the memorandum and was supported by the relevant ancillary and incidental powers.
Conclusion: The contract was intra vires the company and the ultra vires defence failed.
Ratio Decidendi: Where a company's memorandum authorises business that, in the bona fide opinion of its directors, is advantageous in connection with or ancillary to its main business, a transaction made under that authority is intra vires if it is reasonably referable to those objects.
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