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“Directors are agents of the company.” Which of the following cases relate to the principle of agency…

All four cases—(a), (b), (c) and (d)—are classic authorities illustrating different facets of the agency position of company directors. In Ferguson v. Wilson (1866), Cairns…

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“Directors are agents of the company.” Which of the following cases relate to the principle of agency of company directors (including their contractual position as corporate agents, imputation of notice to the company, and exceptional agency towards shareholders)?

(a) Ferguson v. Wilson
(b) Elkington and Co. v. Hurter
(c) Hampshire Land Co., re
(d) Allen v. Hyatt

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Answer and explanation

Correct answer D

All four cases—(a), (b), (c) and (d)—are classic authorities illustrating different facets of the agency position of company directors. In Ferguson v. Wilson (1866), Cairns LJ laid down the foundational rule that since a company has no physical person of its own, it can act only through directors, who stand in the ordinary relationship of agent to principal. In Elkington & Co. v. Hurter (1892), this principle was applied to hold that directors contracting on behalf of a company act as its agents and do not incur personal liability on the contract. Re Hampshire Land Co. (1896) governed the agency rule regarding when notice or knowledge acquired by a director or officer is imputed to the company, and Allen v. Hyatt (1914) established that in special circumstances directors may also constitute themselves agents for individual shareholders when negotiating the sale of their shares.

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