Pre-incorporation
1. Old Regime
a. Selling of wine to a hotel signed by a promoter on behalf of the company,
then the promoter is personally liable (Kelner v Baxter)
b. Purports to be selling the company’s goods, not his own goods and merely
adding his own signature under the pre-incorporated company name was for
a non-existent entity (Newborne)
2. Too formalistic:
a. On behalf of the company vs Own name as confirmation of company’s
signature
b. Purely a matter of construction
c. A matter of intention on part of the agent to be personally liable or not
3. New Regime
a. S. 51 Companies Act 2006
i. ‘Purport’
1. Process of undergoing a name change but company still
deemed to exist, so not about personal liability (Dan Marbel)
ii. ‘By or on behalf’
1. Eliminates the Kelner vs Newborne distinction
iii. ‘Not yet formed’
1. Does not include a company which has been struck off the
register and dissolved (Contronic)
iv. Person purporting is personally liable
1. Musicians agreeing to a record label but split up, so band
never forms (Phonogram v Lane)
v. Unless there is an agreement ‘to the contrary’
1. ‘the benefit of this contract is personal to the buyer’ (Royal
Mail Estate)
b. Promoter enforcing a contract
i. The incorporated company could not get planning permission so
refused to complete the sale of land, but this was merely due to a
‘bad bargain’ which is against normal contract law principles
(Braymist)
c. Company enforcing the contract
i. Contract cannot be ratified (Natal Land)
ii. Only way is through a novation (substitution of a new contract for one
already existing)
iii. Suggestion (obiter) that where a pre-incorporated contract results in
the corporate agent being a party under the section, any property
received by the agent would be held by him as constructive trustee
for the benefit of the company (Robot Arenas)
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1. Old Regime
a. Selling of wine to a hotel signed by a promoter on behalf of the company,
then the promoter is personally liable (Kelner v Baxter)
b. Purports to be selling the company’s goods, not his own goods and merely
adding his own signature under the pre-incorporated company name was for
a non-existent entity (Newborne)
2. Too formalistic:
a. On behalf of the company vs Own name as confirmation of company’s
signature
b. Purely a matter of construction
c. A matter of intention on part of the agent to be personally liable or not
3. New Regime
a. S. 51 Companies Act 2006
i. ‘Purport’
1. Process of undergoing a name change but company still
deemed to exist, so not about personal liability (Dan Marbel)
ii. ‘By or on behalf’
1. Eliminates the Kelner vs Newborne distinction
iii. ‘Not yet formed’
1. Does not include a company which has been struck off the
register and dissolved (Contronic)
iv. Person purporting is personally liable
1. Musicians agreeing to a record label but split up, so band
never forms (Phonogram v Lane)
v. Unless there is an agreement ‘to the contrary’
1. ‘the benefit of this contract is personal to the buyer’ (Royal
Mail Estate)
b. Promoter enforcing a contract
i. The incorporated company could not get planning permission so
refused to complete the sale of land, but this was merely due to a
‘bad bargain’ which is against normal contract law principles
(Braymist)
c. Company enforcing the contract
i. Contract cannot be ratified (Natal Land)
ii. Only way is through a novation (substitution of a new contract for one
already existing)
iii. Suggestion (obiter) that where a pre-incorporated contract results in
the corporate agent being a party under the section, any property
received by the agent would be held by him as constructive trustee
for the benefit of the company (Robot Arenas)
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