Aanpassing van die verteenwoordigingsreg in maatskappyverband
educational resource
posted on 2024-11-18, 14:55authored byInaugural addresses
Inaugural lecture--Faculty of Law, Rand Afrikaans University, 17 August 1978@@Since a company as a legal persona must necessarily act through agents, the law of agency plays an important role in dealings with companies. However, the law of agency as applicable to companies has undergone some considerable changes.
Firstly, as a result of section 36 of the Companies Act, a company is bound to ultra vires acts and is not even allowed to rely on the lack of authority of its directors. In the second place the position of third parties dealing with the company is severely curtailed as a result of the doctrine of constructive notice.
The most important adaptation of normal agency principles was achieved as a result of the so-called Turquand rule. Bona fide third parties dealing with the company
are entitled to assume that the internal affairs of the company were carried out in the prescribed way. Therefore they are allowed to hold the company to the contract irrespective of the fact that it may be shown that the agent lacked the necessary authority. Unfortunately the Turquand rule and estoppel were often confused with each other -to the detriment of bona fide third parties. It is therefore necessary to be able to define the exact scope of the Turquand rule. It is submitted that this rule should only be applied if it is shown that the organ or officer
acting on behalf of the company has been appointed to a certain office in the company and that he is acting within the scope of his usual authority. Should it be proved that he was never appointed to an office in the company or that the act which he performed fell outside his usual authority, the third party will have to rely on estoppel.
It is clear that the doctrine of constructive notice has outlived its usefulness and ought to be abolished. The so-called protection of the company inherent in this doctrine could be retained by means of a rebuttable presumption that third persons
dealing with the company are aware of the contents of the company's public documents. Bona fide thirds would thus be adequately protected.