218. Liability of receiver Flashcards
- Liability of receiver
General overview
[218.01] Section 218 was adapted from the English provision, viz s 369(2) of the Companies Act 1948 (UK), to overturn the common law position that the receiver or manager is not personally liable for goods and services which he contracted on behalf of the company in the performance of his duties as receiver. The primary liability belongs to the company, and if the receiver was to expend any costs and expenses on behalf of the company, he shall be indemnified for such costs and expenses at common law. However, no supplier of goods and services would want to contract with the company in receivership for the risks of non-payment are high, unless they can be assured of payment by the receiver or manager. Thus, s 218 was enacted to fill in this gap to facilitate the carrying on of the business of the company in receivership with a view to realising its assets for the benefit of the debenture holder.
