is that a shareholder, whether preferential or not, cannot break up the company merely because dividends are not paid to him, whereas a debenture holder, being a creditor, must be paid his interest and capital in due course, and, in default, will be entitled to wind up the company.

MANAGER.

The directors are generally given express or implied. power to appoint managers, secretaries, and other officers of the company. The appointment is very commonly made by resolution at a board meeting, stating the terms agreed on; but it is extremely desirable that the appointment should be embodied in an agreement in writing. The agreement generally provides (inter alia) that the officer shall be appointed for a fixed period, shall duly discharge the functions of his office, shall be paid a certain salary, and that either party shall have power to determine the agreement on notice. Unless an agreement is in writing, the officer, if improperly dismissed, may find that he cannot sue for damages. It may here be mentioned that the Court will not grant specific performance of a contract for personal service. E.g., if A. is appointed manager of a company for a term of years and is improperly dismissed, he cannot compel the company to employ him, but must sue for damages. So if A. improperly leaves the company's service, the company can only sue for damages. For forms of agreement appointing managers, secretaries, &c., see Company Precedents, p. 68.

COMMITTEES.

The regulations generally empower the directors to delegate to one or more members of their body any of their powers.

This power is frequently exercised, especially in large companies. The delegation will be effected by resolution passed at a meeting of the board.

and

"That Messrs. be and they are hereby appointed a committee with power on behalf of the company to, &c." "That Mr. be and he is hereby appointed a committee for the purpose of, &c.; and that the following powers and

authorities be delegated to him, (1) power to, &c., (2) power to, &c."

"That Messrs.

and be and they are hereby ap

pointed a committee for the purpose of settling with Mr. the terms of an agreement for, &c., and that they be authorized to execute on behalf of the Company an agreement in writing embodying such terms."

If the committee consists of more than two members, it is usual to make provision as to quorum, chairman, &c.

CONTRACTS.

It is not essential that a contract with a company should be under seal, in order to bind the company. A contract under seal is only necessary where in the case of an individual it would have to be under seal, e.g., a lease for more than three years, a bond, &c.

Nor is it essential that a contract by a company should in all cases be in writing. The directors of a company, or any one or more of them duly authorised, or any other person duly authorised by the directors, can bind the company by verbal contracts, except where a contract is by law required to be in writing, e.g., for the sale of land, where the contract is not to be performed within one year, pay the debt of another, &c.

to

As to verbal contracts:

If some person attends at a board meeting and makes an offer to the directors, and the chairman, with the assent of the majority of the other directors present, accepts the offer on behalf of the company, the company is bound. So, too, if a board meeting authorises one of the directors to enter into a contract on behalf of the company with an outsider, he can make the contract by word of mouth and it will be binding on the company. The person making a verbal contract on behalf of the company must either be authorised at the time of the contract or beforehand, or else the contract made by him must be ratified by a subsequent board meeting. And, as already mentioned, it must be borne in mind that verbal contracts only bind the company when such contracts would bind individuals. The directors very commonly have power to appoint managers and agents for various purposes. Such persons can bind

the company by any contract the making of which is necessary for effecting the object of their appointment.

The directors can also bind the company by contracts in writing, except where the contract, if between ordinary individuals, would have to be under seal, e.g., a lease for more than three years, a bond, &c.

However, in many companies it is usual, when the contract is at all important in character, to make it under the seal of the company. And the regulations of some companies require certain contracts to be under seal and executed in a particular way. Where such a rule exists, it must be duly observed.

In ordinary cases, where a deed is not necessary, the contract should not be under seal, in order that the expense of stamping it as a deed may be avoided.

All contracts, whether in writing or verbal, made by the directors or any other person on behalf of the company, ought to be expressed to be made in the name or on behalf of the company. Thus agreements in writing will be as follows:

between The -Comof the other

pany Limited of the one part, and A. B. of

part; whereby it is agreed as follows:-The company shall sell, and the said A. B. shall buy, &c.

In such case the conclusion will be:

[and

As witness the hand[s] of -two of the directors of the company] on behalf of the company and the hand of the said A. B. the day and year first above written.

And the signatures will be duly witnessed.

The person or persons signing on behalf of the company will be the person or persons who have been authorised to make the contract.

If a director or other person enters into a contract on behalf of the company, without having the necessary authority, but expecting that the board will ratify his act, the contract may be framed as above, with the addition of a clause as follows: "This agreement is conditional on the ratification thereof by the said company before the day of

next."

If the contract is to be under the company's seal it will conclude thus:

In witness whereof the company hath caused its common seal to be hereunto affixed, and the said A. B. hath set his hand hereunto, the day, &c.

or:

As witness the seal of the company and the hand of the said A. B., the day, &c.

In such case there will be an attestation clause, thus:

The seal of the company was affixed hereto in the presence of

L.S.

If thought fit, a contract may be made thus:

An agreement made, &c., between A. B. on behalf of The Company Limited of the one part, and C. D. of the other

part, whereby it is agreed as follows:

1. The company shall, &c.

2. The said C. D. shall, &c.

And the conclusion will be

As witness the hands of the said parties hereto, the day, &c. A contract under the seal of a company requires a 10s. impressed deed stamp. If under hand merely a 6d. agreement stamp is sufficient. The stamp may be either impressed or adhesive. If an adhesive stamp is used, care should be taken that it is properly cancelled, i.e. the person who first signs the document should put his initials and the date of signature on the stamp.

Many companies have a hand stamp engraved with the words, "For The Company Limited;" and the directors, agents, managers and other persons signing contracts, bills, notes, &c. on behalf of the company, or entering into correspondence with a view to any contract, will impress the stamp just above or below the signature.

BILLS AND NOTES, &c.

It is not every company which has power to draw, accept, indorse and execute bills, notes, &c. Sometimes the power is expressly included among the objects set forth in the Memorandum. Where this is the case of course there is no doubt as to the company's power, but

in many cases the power is implied from the objects, e.g. if the objects are to carry on any trade or business in which it is usual to exercise the power, it is implied. The usual mode of accepting a bill on behalf of a company is :

A bill drawn on a company ought to be addressed to the

company thus: "To the

66

To the Directors of the

A promissory note will be:

Company Limited," not Company Limited."

Three months after date, The promises to pay to received.

or order, the sum of

Company Limited value

For, &c. [as above].

An indorsement will be:

Pay to, or order.
For, &c. [as above].

A cheque will be signed in the same way.

A bill, note, cheque or indorsement may be accepted, drawn or made on behalf of a company, by any person who has the necessary authority. See supra, p. 30.

Persons signing such instruments should take care to express it to be "For" the company, otherwise they will be personally liable. As to a hand stamp, see supra, p. 32.

CONVEYANCES, ASSIGNMENTS, LEASES, RE

LEASES, DEEDS OF COVENANT, &c.

When the directors, in pursuance of an agreement for sale or otherwise, desire to convey or assign property of the company to a purchaser or some other person, and also when they desire to grant a lease of, or to mortgage, the company's property, the company must be made a party to