Royal British Bank v Turquand
1856 · (1856) 6 E and B 327
Posted By lanbuk.com
- Facts
- The company's deed allowed directors to borrow on bonds if authorised by a resolution of the company. The directors gave a bond to the bank, but no resolution had been passed.
- Issue
- Was the company bound by the bond?
- Held
- Yes. The bank was entitled to assume that the internal resolution had been passed.
- Principle
- An outsider dealing in good faith may assume that the company's internal procedures have been complied with.
- Why it matters
- It is the , reflected in section 56 of the Act.
Words and Latin in this note
- Indoor management rule
- The rule from Royal British Bank v Turquand that an outsider dealing with a company in good faith may assume its internal procedures have been followed. Open the note.
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