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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 31300
Experience:  Over 5 years in practice
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If a person claiming to be an authorised director

Customer Question

Hi If a person claiming to be an authorised director signs an agreement but it later transpires that he had no authority, is there a cause of action against the director? Is there anyway the agreement can be treated as with the director? s.51 of the Companies Act 2006 doesn't appear to be helpful because the company in question existed at the time of the agreement.

I am not, at this stage, concerned about the company itself.

Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you. I am a company law expert.
What exactly did this person sign? Did they hold themselves out to be a director? Did the board of directors authorise this?
Who is trying to enforce the agreement? Is it the other party?
Kind regards
AJ
Customer: replied 2 years ago.

Hi Alex

Thank you for your reply. I work as a self-employed consultant and entered into a contract to provide services to what I believed to be a limited company.

The person held themselves out to be a director of that company. It was not authorised by the board of directors and the person was not in fact a director.

I am trying to enforce the agreement (preferably against the person who signed it) as the person who signed it benefitted from it. You can probably guess that payment remains outstanding.

Do let me know if you need anything else.

Kind regards

Expert:  Alex J. replied 2 years ago.

Hi, Thank you. Did this person even work for the company concerned? Did they sign the agreement "For and on behalf of the company"? I am away from my computer at the moment but will prepare a detailed response for you in the morning. I would note there is something known as ostensible authority which may give you grounds to enforce the contract against the company. Were the actions of this so called "director" just misguided but well intentioned or genuinely deceitful? Thank you kind regards AJ

Customer: replied 2 years ago.

Hi Alex,

I'm not sure exactly what his position was with the company. I think he was an employee at the time but not a director.

The signature does say "for and behalf of [XYZ Limited]".

I can't say for definite what his intentions were but they come across as deceitful to me.

Re ostensible authority - this is against the company? Is there anyway of using it against the person who signed the contract? Surely, he knew he wasn't a director/authorised to sign, is there anyway to enforce it against him?

Thanks again.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
The problem you have is he did not sign the contract in his name personally he signed on behalf of the company. You could try and argue that if the company is not bound by the contract then they fall out of the arrangement and he is personally liable as an agent of the company.
He will always however have a defence that he never signed the contract in his personal name.
The only other claim you could make against him is fraud. This is however is very hard to prove.
What exactly do you want to claim? Loss of earnings?
Is there a reason why you want to enforce against him and not the company?
Kind regards
AJ