Provision of fiduciary duties - company management, Business Law and Ethics

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Provision of Fiduciary Duties - company management:

This provision is supplemented by Article 84 of Table A which provides that-

 i. The director shall not vote in respect of the contract. If he does vote, his vote shall not be counted; and

 ii. The director shall not be counted in the quorum present at the meeting.

1. Industrial Development Consultants Ltd v Cooley (69) in which the director became personally interested in a contract he had been assigned to negotiate for the company.

2. Cook v Deeks (70) in which some of the company's directors diverted to themselves a contract that was intended to be for the company. Since it was held that they had to surrender the benefit of the contract to the company. In law the benefit of the contract belonged to the company which the directors had formed for the purpose of obtaining the contract but in equity the contract belonged to the company for which it was intended.

In Bray v Ford Lord Herschell stated that the aforesaid rule is not "founded upon principles of morality" but is based on the consideration that human nature being what it is, there is danger, in such circumstances, of the person holding a fiduciary position being swayed by interest rather than by duty and thus prejudicing those whom he was bound to protect".


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