Chapter 3: Ultravires

Question 1

1. Contractual liability of a company

Answer 1

In this section you will learn about how a company enters into transactions as a legal person and
the historical development of the doctrine of ultra vires.

Question 2

1.1 How does a company act?

Answer 2

Obviously, a company is inanimate and therefore needs human agents to act on its behalf. Where
the board of directors makes a decision, or a decision is made in a meeting of the shareholders, it
is easy to see that decision as a decision of the company. However, outsiders (eg suppliers) usually deal with individuals involved in the company eg the managing director, or a particular employee.

In what circumstances are decisions taken by those persons treated as decisions of the company? In other words, when do the acts of (human) directors or employees bind the
(inanimate) company to obligations to third parties, and does the company have capacity to be
bound? We look at the circumstances in which a company itself is directly or personally liable.

Question 3

1.2.1 Capacity

Answer 3

It was necessary to check the objects clause in the memorandum to ascertain what acts and/or
business the company was empowered to participate in. If the transaction was outside of the
company’s powers, the consequence was that it would be void and unenforceable (ultra vires)
against the company even if the shareholders attempted to ratify the act. This is because the
company was not incorporated with the requisite capacity (Ashbury v Riche 1875).

Question 4

Authority

Answer 4

If the company did have capacity, the next question was whether the individual who contracted
on the company’s behalf authorised to do so? If so, then the transaction was valid but if not, the consequence was that the transaction would be voidable at the instance of the company.

The capacity question has far less relevance to companies incorporated under CA 2006 as the memorandum no longer contains an objects clause, and in any event under s 31 CA 2006, a company’s objects are unrestricted (subject to the articles).

Question 5

1.3 Capacity

Answer 5

As you learnt earlier in the module, in order to set up a company two documents are required: the
memorandum and the articles of association. Prior to CA 2006, the memorandum was a constitutional document and contained a very important clause known as the objects clause. The objects clause set out what the company was empowered to do, ie its capacity.

Question 6

1.4 The doctrine of ultra vires

Answer 6

Doctrine of ultra vires: The doctrine of ultra vires refers to the situation where a body purports
to act outside its power. This doctrine derives from public law – public bodies are granted certain powers by Parliament and are not permitted to go beyond these powers.

The doctrine was deemed to apply to registered companies in order to protect creditors and shareholders.
The theory was that companies should be restricted in their activities to those which the shareholders and creditors had initially provided money to fund.

Question 7

Vulnerability of being wound up

Answer 7

Companies were therefore not permitted to act outside of their objects clauses. Acts outside the
objects were known as ultra vires and were held to be void. If the company was unable to
achieve its stated object then it was vulnerable to winding up by the court.

Question 8

Key case: Re German Date Coffee Co (1882) 20 Ch D 169

Answer 8

The company’s object was to acquire and exploit a German patent for producing coffee from
dates. The company failed to get the German patent but managed to get a Swedish patent and
had a profitable date coffee business. However, the company was wound up by the court since it
could not achieve its stated object.

Question 9

Problems with the doctrine

Answer 9

(a) The objects clause was initially not permitted to be altered
(b) Registered companies often did diversify and change their business, and this then led to problems. Diversification is often key to businesses to protect for the future.
(c) The doctrine of constructive notice combined with the ultra vires rule to cause problems for third parties seeking to enforce contracts against companies

Question 10

Doctrine of constructive notice

Answer 10

The doctrine of constructive notice applies to all publicly available documents (which includes a company’s memorandum and articles as these are filed
at Companies House) and deems anyone dealing with registered companies to have notice of
the contents of their public documents. The reason for this was an attempt to avoid the effects of the ultra vires rule and provide the company with sufficient capacity for its trading.

Question 11

Key case: Bell Houses Ltd v City Wall Properties Ltd [1966] 2 QB 656

Answer 11

In the case of Bell Houses Ltd v City Wall Properties Ltd [1966] 2 QB 656 the court accepted as valid an objects clause which concluded with the statement:
to carry on any other trade or business whatsoever which can, in the opinion of the board of
directors, be advantageously carried on by the company in connection with or as ancillary to
any of the above businesses or the general business of the company.

Question 12

Ordinary Trading Companies

Answer 12

Ordinary trading companies registered between 1991 and 2009 (when the final part of CA 2006
came into force) usually specified in the memorandum that the company was a ‘general commercial company’. This was permitted under the provisions of s 3A CA 1985 and meant that the company could carry on any trade or business and had power to do all such things as were
incidental or conducive thereto.

Question 13

Key case: Re Introductions Ltd v National Provincial Bank [1970] Ch 199 /

Answer 13

In this case the company, which was incorporated in 1951 at the time of the Festival of Britain, had an object of providing foreign visitors with accommodation and entertainment. The company later diversified into pig breeding, which was (understandably) not covered by the objects clause. The bank were unable to enforce a debenture as a secured creditor or claim as an unsecured creditor in the company’s liquidation since the company was held to have acted ultra vires

Question 14

Recommendations for reform of the law

Answer 14

In this area to protect third
parties, which finally started to take place following the UK joining the European Community in 1973. The First European Community Company Law Harmonisation Directive removed the doctrine of constructive notice where it concerned the memorandum and articles.

It also contained a saving provision for ultra vires transactions where the transaction was dealt with by the directors and the third party was acting in good faith (now incorporated into s 40 CA 2006).

Question 15

1.5 The reform of ultra vires: The CA 1985

Answer 15

Introduced a number of
changes, particularly that the memorandum could be altered by special resolution, allowing
companies to change their objects clause (s 4) and also that companies were permitted to have a general objects clause which stated that the company was to carry on business as a ‘general commercial company’ (s 3A), which allowed the company to carry on any trade or business
whatsoever.

Question 16

Changes introduced to the CA 2006

Answer 16

(a) The introduction of a provision in s 35 CA 1985 removing the doctrine of constructive notice in relation to a company’s memorandum and articles. This remains and is now enshrined in s 39(1) CA 2006.

‘The validity of an act done by a company shall not be called into question on the ground of
lack of capacity by reason of anything in the company’s constitution.’

(b) Finally, in CA 2006 the requirement for an objects clause in the memorandum was completely removed. Section 31 CA 2006 states that the default position is now that all companies have unrestricted objects. A company may still choose to insert a limitation on its capacity in its articles but this is rare.

Question 17

1.6 Companies formed prior to CA 2006

Answer 17

In practice you will come across many companies that were incorporated prior to 2009 (when CA
2006 came into force) and therefore were incorporated with an objects clause in the memorandum.

These pre-CA 2006 companies objects clauses are treated as if they were a provision of the articles (s 28(1) CA 2006) and will continue to bind the company unless altered by special resolution.

Question 18

1.7 Agency and authority

Answer 18

As company is inanimate and therefore cannot act itself, the company’s directors or employees
must therefore act as its agents.

Agent: Under general agency law, an agent is appointed by a principal to act on their behalf. An agent contracts on the principal’s behalf and the contract will be entered into between the principal and the third party, not the agent, who merely acts to represent the agent.

Question 19

Agent needs an authority

Answer 19

In order to validly represent the principal and to bind the principal, an agent needs authority. This authority may be actual (express or implied) or deemed (either by statute or under common law (ostensible authority or the indoor management rule))

Question 20

1.8 Actual authority – express or implied

Answer 20

The actual authority of an agent is the authority that has been actually conferred on them by the principal.

Question 21

The actual authority of an agent is the authority that has been actually conferred on them by the
principal.

Answer 21

Diplock LJ stated:
An ‘actual’ authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts […]

Question 22

Directors’ general authority

Answer 22

3. Subject to the articles, the directors are responsible for the management of the company’s
   business, for which purpose they may exercise all the powers of the company. MA 5 and 6 also give directors the authority to delegate any of their powers to others.

Question 23

1.9 Actual authority – implied actual authority

Answer 23

Actual authority can be express or implied. Implied actual authority arises either from appointment to a specific role in the company or from a course of dealing.

Question 24

1.9.1 Implied actual authority from appointment to a specific role in the company

Answer 24

Implied actual authority can be distinguished from ostensible or apparent authority as with
implied actual authority, it is only the relationship between the principal and the agent which is relevant to determining whether implied actual authority exists

Question 25

Key case: Smith v Butler [2012] EWCA Civ 314

Answer 25

The court had to determine whether a managing director had implied power to suspend the company’s executive chairman without express authorisation by the board. It was held that the implied powers of a managing director are those that would ordinarily be exercisable by a
managing director in his position, subject to the company’s articles and anything that the parties expressly agreed. The court considered that this did not include the suspension of the chairman.

Question 26

1.9.2 Implied actual authority from a course of dealing

Answer 26

Actual authority can also be implied from a course of dealing, for example where a director or other agent continually enters into specific transactions and the board of directors either acquiesces or agrees to this.

Question 27

Key case: Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549

Answer 27

Mr Richards was the chairman and chief executive of the defendant company. He had agreed
with the claimant (MD of another company which planned to merge with the defendant company) that the defendant company would guarantee repayment of loans and indemnify the claimant against losses. The defendant company argued that Richards did not have authority to do this and therefore the company was not bound. Despite having no express authority, the Court of Appeal held that he had implied actual authority from a course of dealing due to his conduct over many months of entering into similar contracts and later notifying the board, who never objected.

Question 28

1.10 Deemed authority

Answer 28

Deemed authority: Deemed authority refers to the situation where an agent has no actual authority yet can still bind the principal.

There are three categories of deemed authority:
(a) Statutory deemed authority under s 40 CA 2006
(b) Deemed authority at common law – ostensible (or ‘apparent’) authority
(c) Deemed authority at common law under the ‘indoor management’ rule in Turquand’s case

Question 29

1.11 Statutory deemed authority under s 40 CA 2006

Answer 29

The purpose behind s 40 is to protect third parties where there are restrictions on the power of the
company’s agents to bind the company set out in the company’s constitution. Third parties who
deal with a company in good faith are entitled to assume that directors’ powers are free of any constitutional limitations.

This means that the company cannot claim not to be bound by the acts of its directors by asserting these acts to be unconstitutional. This is the case even where the company’s articles require specific shareholder or board approval for a particular act.

Question 30

Section 40

Answer 30

40. Power of directors to bind the company
    (1) In favour of a person dealing with a company in good faith, the power of the directors to
    bind the company, or authorise others to do so, is deemed to be free of any limitation under
    the company’s constitution.

Question 31

Dealing with the company

Answer 31

(2) For this purpose -
(a) a person “deals with” a company if he is a party to any transaction or other act to which the company is a party,
(b) a person dealing with a company -
(i) is not bound to enquire as to any limitation on the powers of directors to bind the company or authorise others to do so,
(ii) is presumed to have acted in good faith unless the contrary is proved, and
(iii) is not to be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution.

Question 32

References to above limitations

Answer 32

(3) The references above to limitations on the directors’ powers under the company’s constitution include limitations deriving -
(a) from a resolution of the company or of any class of shareholders, or
(b) from any agreement between the members of the company or of any class of shareholders

Question 33

Threashold for bad faith is high

Answer 33

The threshold for bad faith is high – see s 40(2)(b) above. Note that s 40 only protects third parties, not directors. If a director acts outside their authority, the company can sue the director and recover compensation for any consequential losses that those acts have caused the company. The director may also be disqualified. You will learn about
this in more detail in the next topic.

Question 34

1.12 Deemed authority at common law – ostensible authority

Answer 34

Actual authority arises from the relationship between principal and agent. In contrast, ostensible
or apparent authority is determined by looking at the relationship between the principal and the
third party. Ostensible authority refers to the authority of an agent as it appears to the third party.

Question 35

Key case: Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Answer 35

Kapoor (K) and Hoon (H) had formed Buckhurst Ltd to buy and resell a large estate. There were
four directors, including K and H, and the articles of the company required all four directors to constitute a quorum. Although not appointed as the managing director, K acted as such and engaged the claimants, a firm of architects and surveyors, to apply for planning permission to
develop the estate. Buckhurst Ltd later refused to pay the claimants’ fees, arguing that K had no
authority to engage them

Question 36

Court of Appeal Judgement

Answer 36

The Court of Appeal upheld the claim on the basis of ostensible authority. Although K had no actual authority, the board had held K out as the managing director, allowing him to act in this way, and therefore K had ostensible authority to bind the company.

Question 37

1.13 Deemed authority at common law under the ‘indoor management’ rule in Turquand’s case

Answer 37

This rule is of lesser significance now due to s 40 CA 2006, but it still applies in certain situations,
in particular where the third party has not dealt directly with the board or a question of whether the agent was authorised by the board applies.

Question 38

Key case: Royal British Bank v Turquand (1856) 6 E & B 327

Answer 38

The bank brought a claim for the return of money owed by the company. The company argued that the manager who negotiated the loan should have been authorised by a resolution of the shareholders to enter into the loan, and as he had not obtained this authorisation, the loan was void and the company not required to pay back the money.

The doctrine of constructive notice would mean that the bank was deemed to know of the requirement for authorisation in the company’s constitution. The court held that as the public documents would only reveal that a resolution was required and not whether such a resolution had been passed, the loan was valid.

Question 39

Definition of the indoor management rule

Answer 39

The principle stated was that outsiders are entitled to assume that the company’s internal procedures have been complied with. This is often referred to as the ‘indoor management’ rule.

Question 40

Turquand’s case with Third Party Insider

Answer 40

Note that the rule in Turquand’s case will not apply where the third party has actual notice of the
irregularity or is not acting in good faith (Rolled Steel Ltd v British Steel Corpn [1986] Ch 246). It also does not apply where the third party is an insider, such as a director who enters into a contract with the company (Morris v Kanssen [1946] AC 459).

Question 41

1.14 Ratification

Answer 41

A company is able to ratify acts that are beyond the actual authority of its agents, provided that the act is within the authority of the appropriate organ of the company who are looking to ratify it (the board or the shareholders). Ratification involves passing a resolution to approve the act and
agree that the company will be bound by it.

Question 42

Key case: New Falmouth Resorts Ltd v International Hotels Jamaica Ltd [2013]
UKPC 11

Answer 42

In this case the agent had no actual or ostensible authority to enter into the transaction but the company ratified the transaction, which meant that it was no longer able to rely on the lack of authority of the agent.

The court stated: ‘the acts of an agent on behalf of the principal outside his actual authority may be adopted and ratified’ and ‘if there is ratification it has retrospective effect, ie it renders the transaction with the company binding on it from the time it was entered into by the agent’.

Question 43

1.15 Summary

Answer 43

Does the company have actual or deemed capacity?

For CA 2006 companies the answer will be yes (s 31).
For pre-CA 2006 companies, check the memorandum and articles to see whether the objects clause restricts the company’s capacity to enter into the contract.

(a) Does the agent have actual authority (express or implied)?
If yes, the contract is binding. If no:
(b) Does s 40 CA 2006 remedy the defect and make the contract binding?
If yes, the contract is binding. If no:
(c) Does the agent have ostensible authority? (ie has there been a representation by someone
with actual authority reasonably relied on by the third party?)
If yes, the contract is binding. If no:
(d) Does the rule in Turquand’s case assist? Is reliance reasonable?
If yes, the contract is binding. If no:
(e) Has the company ratified the act?
If yes, the contract is binding. If no, the contract is NOT binding.

Question 44

2. Pre-incorporation contracts and liability in tort and crime

Answer 44

In this section you will learn about liability for pre-incorporation contracts and whether tortious or
criminal liability may be attributed to companies.

Question 45

2.1 Pre incorporation contracts

Answer 45

As you know, a company comes into existence at the time of issue of the certificate of incorporation by the Registrar of Companies (s 16 CA 2006). Until this time, it is not a legal person and therefore has no capacity to enter into contracts (Rover International Ltd v Cannon Film Sales (No 3) [1987] BCLC 540.

If the contract is entered into before the company is incorporated, then as the company did not exist at that point as a legal person, it is not possible for the company to have legal rights or duties under the contract because it had no legal capacity at that point. Therefore, an important issue arises as to who can be liable under a ‘pre-incorporation contract’

Question 46

The Contracts (Rights of Third Parties) Act 1999,

Answer 46

The Contracts (Rights of Third Parties) Act 1999, which allows third parties to enforce contracts where the contract expressly provides or a term in the contract confers a benefit on the third
party, does not apply to pre-incorporation contracts because these will impose obligations (burdens) and not only benefits on the third party.

Question 47

2.2 Pre-incorporation contracts: Section 51 CA 2006

Answer 47

This situation is now dealt with by s 51 CA 2006. This seeks to protect third parties who believe they are entering into a contract with a company which is incorporated and registered by making pre-incorporation contracts enforceable as personal contracts against the persons purporting to act on the company’s behalf (known as ‘promoters’). Thus, since there is no company to be privy to pre-incorporation contracts, its promoters bear personal liability.

Question 48

51 Pre-incorporation contracts, deeds and obligations

Answer 48

(1) A contract that purports to be made by or on behalf of a company at a time when the
company has not been incorporated has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is
personally liable on the contract accordingly.

It is necessary to look at the facts to determine whether there was an express agreement that the
signatory would not be personally bound by the contract (as per Denning LJ in Phonogram Ltd v Lane [1982] QB 938.)

Question 49

Key case: Hepburn v Revenue and Customs Commissioners [2013] UKFTT 445

Answer 49

The appellant had agreed to provide consultancy services to a company though the medium of a limited company which at the time of the agreement had not yet been incorporated. The consultancy services were performed and the fees were paid to solicitors who held the monies on behalf of the limited company until it was incorporated.

The question on appeal was whether the fees should be taxed as the appellant’s personal income rather than the company’s income. The court held that the ‘subject to any agreement to the contrary’ proviso applied here as there was never any intention on anyone’s part that the appellant should become personally entitled to the fees.

Question 50

Key case: Royal Mail Estates Ltd v Teesdale [2015] EWHC 1890

Answer 50

In this case, the court applied Denning LJ’s reasoning in the Phonogram v Lane case. The contract concerned the sale of property in London and contained a clause which stated: ‘The benefit of
this contract is personal to the buyer’. The judge did not consider this wording to exclude the effect of s 51, as it did not expressly indicate an intention to exclude the effect of s 51 and at the
time the contract was formed, neither of the parties was aware that the company had not been incorporated.

Question 51

2.3 Pre incorporation contracts - ratification?

Answer 51

Note that a company cannot ratify a contract made before it came into existence since
ratification is only possible for acts which a company could have authorised at the time. Since the company did not exist at the time the contract was formed, it could not have authorised an agent to act on its behalf and so is not able to retrospectively authorise purported agents (Kelner v Baxter (1866) LR 2 CP).

Question 52

Novate the Contract

Answer 52

The only way in which the company can obtain the benefit of a contract purportedly made on its
behalf before it came into existence is to novate the contract (Natal Land Co & Colonization Ltd v Pauline Colliery and Development Syndicate Ltd [1904] AC 120 PC).

Question 53

Shelf company & Section 51

Answer 53

The reason for this is that the company which enters into the contract is already formed and is a legal person, even though the name of the company and other details are later changed.

This means that an individual involved in the negotiation of a contract formed between a shelf company and a third party before the shelf company is renamed as the new company is not personally liable (Oshkosh B’Gosh Inc v Dan Marbel Inc Ltd [1989] BCL 507).

Question 54

2.4 Pre incorporation contracts – liability of the agent or promoter

Answer 54

A person purporting to act as an agent of a company which is not yet incorporated will be liable under the contract under s 51 but also can enforce that the contract ie both the obligations but
also the rights under that contract are conferred on the agent. The case below was decided under s 36C CA 1985, the predecessor of s 51, but the decision remains applicable

Question 55

Key case: Braymist Ltd v Wise Finance Co Ltd [2002]

Answer 55

This case involved a contract for the sale of land entered into by solicitors on behalf of a company yet to be incorporated. Subsequently the developers changed their minds and the solicitors
sought to enforce the contract. The court held that the solicitors were entitled to do so.

Question 56

Misrepresentation

Answer 56

The usual rules of contract will apply, so if for example a misrepresentation about the
identity of the party to the contract (the future company) induced the other party to enter into the contract to its detriment, then the other party is entitled to rescind the contract

Question 57

Burden of personal liability

Answer 57

In summary, agents or promoters must beware entering into contracts on behalf of a company
before it is incorporated when it has no capacity to be bound by contracts or be privy to them. This is likely to lead to them assuming the burden of personal liability for such contracts, though they may personally enforce the benefits of such contracts.

Question 58

2.5 Liability in tort and crime

Answer 58

There are two ways in which a company may be liable in tort:

(a) Primary liability – where the company itself is said to have committed the tort through the acts of an individual which are attributed to the company.
(b) Vicarious liability – where there is an individual within the company who is personally liable
for the tort but the company is additionally vicariously liable for that person’s act or
omission. In this situation both the individual and the company are jointly liable

Question 59

Controlling Mind of the Company

Answer 59

This comes from the case law, where the courts set out to identify the ‘controlling
mind’ of the company. This is known as the attribution theory, and similar principles have also been applied under the criminal law, where a mental element is sometimes required to establish liability.

Question 60

2.6 The attribution theory

Answer 60

The difficulty with this theory is that it requires a particular individual within a corporate organisational structure to be identified as the ‘controlling’ or ‘guiding’ mind and this was not always possible. A brief summary of several of the
most important cases follows

Question 61

Key case: Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705

Answer 61

This case involved liability under the Merchant Shipping Act 1894 which had a requirement of fault. Viscount Haldane LC concluded that it was necessary to identify an individual within the
company who was the ‘directing mind and will of the corporation […] the very ego and centre of
the personality of the corporation’. Once that individual has been identified, if that person has the
required fault then that fault can be attributed to the company.

Question 62

Key case: Tesco Supermarkets Ltd v Nattrass [1972] AC 153

Answer 62

In this case Tesco was charged with an offence under the Trade Descriptions Act 1968 for advertising goods at a reduced price then selling them for a higher price. Tesco argued that the company was not at fault, rather it was the manager of the particular store. The court found that
the manager was not the ‘guiding mind’ and therefore Tesco could not be liable for his actions.

Question 63

Lord Hoffmann

Answer 63

Opened up the possibility of finding liability based on an assessment of the controllers of the company for the purposes of attribution (ie for the particular purposes in question) rather than
searching for the ‘guiding mind’ of the company, which made liability easier to establish.

Question 64

Key case: Meridian Global Funds Management Asia Ltd v Securities Commission
[1995] 2 AC 500

Answer 64

In this case Lord Hoffmann considered the case law and concluded that the real issue was who were the ‘controllers’ of the company for the purposes of attribution, not the ‘guiding minds’. In
this case the controllers on the facts were found to be two senior managers and the company was accordingly liable. This case allowed the attribution of liability to the company for the acts of
individuals lower down the organisational structure.

Question 65

2.7 Corporate Manslaughter and Corporate Homicide Act 2007

Answer 65

Criminal liability for companies was still difficult to establish even following Meridian Global Funds
Management Asia Ltd v Securities Commission [1995] since it was difficult to find one particular individual with the necessary criminal intent where a series of individuals were involved in an overall corporate failing.

Question 66

(R v P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 72)

Answer 66

This was highlighted in the public domain through the Zeebrugge P & O
ferry tragedy. In the aftermath of this tragedy, seven individuals within P & O were charged with gross negligence manslaughter and the company was charged with corporate manslaughter. The
case collapsed but it set a precedent that a company may properly be charged with corporate manslaughter (R v P & O European Ferries (Dover) Ltd (1991) 93 Cr App R 72).

Question 67

The Offence

Answer 67

The offence is committed by a company if the manner in which its activities are managed or organised by its senior management causes the death of a person and amounts to a gross
breach (ie the conduct fell far below what can reasonably be expected of the organisation in the circumstances) of the relevant duty of care owed to the person. If found guilty, the company may be liable to pay a fine

Question 68

First Company convicted

Answer 68

The first company convicted under this act was Cotswold Geotechnical Holdings ltd in 2011. The company was convicted and fined £385,000 in relation to the death of an employee who had entered an unsupported pit during the course of soil investigation work which had collapsed and
killed him (R v Cotswold Geotechnical Holdings Ltd [2011] EQCA Crim 1337).

Question 69

2.8 Summary

Answer 69

• A company cannot enter into contracts before it is incorporated, since it is not a legal person.
• Under s 51 CA 2006, if a promoter attempts to enter into a contract on behalf of a company pre-incorporation, the promoter will usually be personally liable under that contract.
• Companies may be primarily or vicariously liable in tort and also under the criminal law.
• The attribution theory involves the identification of the ‘guiding mind’ of the company, whose fault liability can be attributed to the company.
• Following the case of Meridian v Securities Commission, it is the controllers of the company for
  the purposes of attribution who are relevant to liability.
• Following the case of Meridian v Securities Commission, it is the controllers of the company for
  the purposes of attribution who are relevant to liability.