Re City Equitable Fire Insurance Co Ltd
1925 · [1925] Ch 407
Posted By lanbuk.com
- Facts
- The company suffered large losses through the fraud of its managing director. The liquidator sued the other directors for .
- Issue
- What standard of care do directors owe?
- Held
- Romer J held that a director need show only the skill reasonably expected of a person of his knowledge and experience, need not give continuous attention, and may officials in the absence of grounds for suspicion. The directors were protected by an in the articles.
- Principle
- The older standard of care was largely subjective.
- Why it matters
- Section 232 now sets the objective standard of a reasonably prudent director, and section 231(4) bars exemption clauses.
Words and Latin in this note
- Exclusion clause
- A term that tries to cut down or shut out liability. It has to be part of the contract, and it is read against the person who relies on it. Open the note.
- Trust
- An arrangement in which a trustee holds property at law but must use it for beneficiaries, or for a charitable purpose. The beneficiaries have the equitable interest. Open the note.
For study only. By lanbuk.com. Always check current sources and consult a qualified professional.