COMPANY DIRECTORS Case Law Exam Revision

Question 1

Directors codified general duties

To act within powers (S.171)

Answer 1

Howard Smith Ltd v Ampol Petroleum Ltd (1974);

Bamford v Bamford (1969)

Question 2

Directors codified general duties

To promote the success of the company (S.172)

Answer 2

Re Smith v Fawcett Ltd (1942)

JJ Harrison (Properties) Ltd v Harrison (2002)

Lonrho Ltd v Shell Petroleum Co Ltd (1980)

West Mercia Safetywear Ltd v Dodd (1988)

Question 3

Directors codified general duties

To exercise independent judgement (S.173)

Answer 3

Boulting v Association of Cinematograph, Television and Allied Technicians (1963)

Question 4

Directors codified general duties

To exercise reasonable care, skill and diligence (S.174)

Answer 4

Lexi Holdings plc (in administration) v Luqman (2009)

Question 5

Directors codified general duties

To avoid conflict of interest (S.175)

Answer 5

Aberdeen Railway Co v Blaikie Brothers (1854)

Regal (Hastings) v Gulliver (1942)

Question 6

Directors codified general duties

Not to accept benefits from third parties (S.176)

Answer 6

No case law

Question 7

Directors codified general duties

To declare interest in proposed transaction or arrangement (S.177)

Answer 7

Aberdeen Railway Co v Blaikie Brothers (1854)

Question 8

Breach of duty consequences

S.178(2) specifically provides that the directors’ duties are enforceable in the same way as any other fiduciary duty owed to a company by its directors and remedies available may include:

Answer 8

(i) damages or compensation where the company has suffered loss
(ii) restoration of the company’s property
(iii) an account of profits made by the director
(iv) rescission of a contract where the director failed to disclose an interest.