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they may even at the time have been better. But still so inflexible is the rule that no inquiry on that subject is permitted. The
English authorities on this head are numerous and uniform." Mr Blaikie’s ‘personal interest would lead him to an entirely opposite direction, would induce him to fix the price as high as possible. This is the very evil against which the rule in question is directed, and here I see nothing whatever to prevent its application." Lord Cranworth LC also stated that: "no one, having duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect".
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186:, which give directors unlimited capacity to bind the company with those dealing in good faith; but if an action by a director is beyond their authority or in breach of some fiduciary obligation, then they can be made personally liable. Arguably therefore, Blaikie Bros would now have been able to enforce the contract, but Aberdeen could then personally sue the directors for damages flowing from any loss.
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While he filled that character, namely, on 6 February 1846, he entered into a contract on behalf of the
Company with his own firm, for the purchase of a large quantity of iron chairs at a certain stipulated price. His duty to the Company imposed on him the obligation of obtaining these chairs at the
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held that
Aberdeen was not bound by the contract. The key points were that it "may sometimes happen that the terms on which a trustee has dealt or attempted to deal with the estate or interest of those for whom he is a trustee, have been as good as could have been obtained from any other person -
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A corporate body can only act by agents, and it is of course the duty of those agents so to act as best to promote the interests of the corporation whose affairs they are conducting. Such agents have duties to discharge of a fiduciary nature towards their principal. And it is a rule of universal
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But, with all deference, this appears to me to make no difference. It was Mr
Blaikie’s duty to give his co-Directors, and through them to the Company, the full benefit of all the knowledge and skill which he could bring to bear on the subject. He was bound to assist them in getting the articles
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The same observation applies to the fact that he was not the sole person contracting with the
Company; he was one of the firm of Blaikie Brothers, with whom the contract was made, and so interested in driving as hard a bargain with the Company as he could induce them to
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It may sometimes happen that the terms on which a trustee has dealt or attempted to deal with the estate or interest of those for whom he is a trustee, have been as good as could have been obtained from any other person - they may even at the time have been better.
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His personal interest would lead him in an entirely opposite direction, would induce him to fix the price as high as possible. This is the very evil against which the rule in question is directed, and I here see nothing whatever to prevent its application.
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application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect.
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section 177, that requires that if directors are interested in a proposed transaction, they should merely declare that interest to the board, and section 239 which stipulates that in approving any transaction the interested director may not vote.
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contracted for at the cheapest possible rate. As far as related to the advice he should give them, he put his interest in conflict with his duty, and whether he was the sole
Director or only one of many, can make no difference in principle.
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Companies Act 1985, Table A, Art 85, a default rule which changes the default rule of the case to say if a director discloses the nature and extent of the interest to the board, an interested transaction will not be
213:"This, therefore, brings us to the general question, whether a Director of a Railway Company is or is not precluded from dealing on behalf of the Company with himself, or with a firm in which he is a partner.
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Mr
Blaikie was not only a Director, but (if that was necessary) the Chairman of the Directors. In that character it was his bounden duty to make the best bargains he could for the benefit of the company.
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seemed to doubt whether the rule would apply where the party whose act or contract is called in question is only one of a body of
Directors, not a sole trustee or manager.
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It obviously is, or may be, impossible to demonstrate how far in any particular case the terms of such a contract have been the best for the interest of the
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So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness or unfairness of a contract so entered into.
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But still so inflexible is the rule that no inquiry on that subject is permitted. The
English authorities on this head are numerous and uniform.
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at £8.50 a ton. They sued to enforce the contract. Aberdeen
Railway argued they were not bound because at the time, the Chairman of their
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The Directors are a body to whom is delegated the duty of managing the general affairs of the Company.
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319:, that a director must declare his interests to the board. Failure to comply leads to a fine.
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179:, was the Managing Director of Blaikie Bros. Therefore, there was a conflict of interest.
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R Flannigan, 'The adulteration of fiduciary doctrine in corporate law' (2006) 122 LQR 449
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will, and it is the duty of directors to avoid any possibility of a
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had an interest in a corporate transaction, the transaction is
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duty of loyalty, and in particular, the duty not to engage in
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gave the leading judgment with which Lord Brougham concurred.
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340:Industrial Development Consultants Ltd v Cooley
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131:. It laid down a basic rule that if a
116:Aberdeen Railway Co v Blaikie Brothers
43:1913 map showing (in red) part of the
233:, which it was possible to obtain.
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348:Island Export Finance Ltd v Umunna
182:This case preceded ss 40-1 of the
108:Self dealing, conflict of interest
32:Aberdeen Railway Co v Blaikie Bros
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163:Blaikie Bros had a contract with
356:Framlington Group plc v Anderson
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404:United Kingdom company case law
332:Regal (Hastings) Ltd v Gulliver
243:The principle was acted on by
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305:2 QB 606, relevant to s 172
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119:(1854) 1 Paterson 394 is a
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271:lowest possible price.
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364:Gencor ACP Ltd v Dalby
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123:case. It concerns the
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77:(1854) 1 Paterson 394
409:House of Lords cases
145:conflict of interest
419:1853 in British law
260:Whelpdale v Cookson
207:Lord Cranworth L.C.
195:Lord Cranworth L.C.
73:(1853) 15 D (HL) 20
71:UKHL 1_Paterson_394
69:UKHL 1_Macqueen_461
47:, successor to the
317:Companies Act 1985
307:Companies Act 2006
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184:Companies Act 2006
177:Sir Thomas Blaikie
173:board of directors
152:Companies Act 2006
45:Caledonian Railway
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97:Lord Cranworth LC
75:(1854) 1 Macq 461
16:(Redirected from
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429:Railway case law
414:1853 in case law
302:Boulting v ACTAT
250:Keech v Sandford
165:Aberdeen Railway
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398:Categories
385:References
375:2 BCLC 704
367:2 BCLC 734
229:cestui que
82:Transcript
343:1 WLR 443
312:voidable.
253:, and by
245:Lord King
141:company's
125:fiduciary
66:Citations
351:BCLC 460
327:1 AC 554
295:See also
190:Judgment
137:voidable
133:director
103:Keywords
359:BCC 611
139:at the
315:s 317
169:chairs
380:Notes
290:make.
231:trust
159:Facts
56:Court
257:in
247:in
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175:,
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20:)
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