Section 37 of Act of 1867 as to contracts. Effect. Construction liable to pay the nominal amount thereof in cash. See further as to this section, infra, p. 12. As to what contracts of a company must be under seal : By s. 37 of the Companies Act 1867, it is provided as follows: Contracts on behalf of any company under the principal Act may be made as follows, that is to say, (1.) Any contract which, if made between private persons, would be by law required to be in writing, and if made according to English law to be under seal, may be made on behalf of the company in writing under the common seal of the company, and such contract may be in the same manner varied or discharged: (2.) Any contract which, if made between private persons, would be by law required to be in writing and signed by the parties to be charged therewith, may be made on behalf of the company in writing, signed by any person acting under the express or implied authority of the company, aud such contract may in the same manner be varied or discharged : (3.) Any contract which, if made between private persons, would by law be valid although made by parol only, and not reduced to writing, may be made by parol on behalf of the company, by any person acting under the express or implied authority of the company, and such contract may, in the same way be varied or discharged: And all contracts made according to the provisions herein.contained shall be effectual in law, and shall be binding upon the company, and their successors, and all other parties thereto, their heirs, executors, or administrators, as the case may be. This statutory power, it will be observed, applies to all companies registered under the Act of 1862, and by virtue of it all such companies may, except as regards the contracts specified in Sub-section (1), contract without seal. The power may, of course, be qualified by the articles of association. As to who is a "person acting under the express or implied authority of Section 37. of the company," under Sub-sections (2) and (3) of the above Section : Authority of agent. This will depend on the regulations of the company. Generally speaking the directors have express or implied authority to enter into all contracts necessary for carrying the objects of the company into effect, and of course, a board meeting can exercise the authority. If the board approves of a contract the directors assembled thereat can sign the contract on behalf of the company, pursuant to Sub-section (2). In most companies the directors can delegate their powers, or any of them, to committees consisting of such member or members of their body as they think fit, and, where this is the case, the power to enter into a specific contract, or into contracts generally, can be vested in the committee, and a contract signed by the committee will be binding. So, too, where there is power to appoint agents, &c., or to delegate to a manager or other person. Moreover, the company can by special resolution authorise any person to enter into a contract or contracts on its behalf. See further as to who is a duly authorised person, Beer v. London and Paris Hotel Co., 20 Eq. 412; Browning v. Great Central Mining Co., 5 H. & N. 856; 29 L. J. Ex. 399; Royal Bank of India's Case, 4 Ch. 252. As to what contracts a leading company may make Contracts without seal apart from the above enactment, see South of Ireland without seal. Colliery Co. v. Waddle, L. B. 3 C. P. 469; Pollock on contracts, 133. Frauds. A note of a contract in the company's minute book may be a suffi- Statute of cient memorandum in writing within s. 4 of the Statute of Frauds, to charge the company, Jones v. Victoria Graving Dock Co., 2 Q. B. D. 314. As to the form which a contract to be signed on behalf of a com- Form of conpany should take : : tract to be executed on Suppose it to be a contract between A. B. and the company. It behalf of a may be expressed to be made (a) "between A. B. of the one part, and company. the company of the other part," or (b) "between A. B. of the one part, and C. D. [the person or persons authorised to enter into it], on behalf of the company, on the other part." The former is generally considered the best plan, but they are equally effectual. Aggs v. Nicholson, 1 H. & N. 165; 25 L. J. Ex. 348. Where Plan (a) is adopted the testimonium clause will run thus: "As witness the hands of the said A. B. and of C. D. [E. F. and G. H.], on behalf of the company," or "in witness whereof the said A. B. and two of the directors of the company on its behalf have hereunto set their hands." Of course no testimonium clause is necessary, and it will be sufficient if the contract is signed thus: A. B., C. D., for the Company. If the agent is made party to the contract as in Plan (b), the testimonium clause, if used, will run: "As witness the hands of the said parties hereto the day, &c.," and the agent can, if he thinks it expedient, ex abundanti cautelâ, qualify his signature by prefixing or adding words showing his agency. liable if it However, it is now settled that where an agent enters into a contract Agent signing on behalf of another, it is not essential, in order that he may avoid contract not personal responsibility, to add any qualifying words to his signature, e.g., as agent for A. B.," or "on behalf of A. B.," or "on account of A. B.," or "for A. B." 66 66 Prima facie if he signs without qualification he is personally liable, but it is a question of intention, and if in the body of the agreement he purport to contract "as agent," or on account of," or on behalf of," or "for" another, he will escape liability. Sec Gadd v. Houghton, 1 Ex. Div. 357, decided by the Appeal Court. As to stamps :— appears on face of contract that he signs as agent. An agreement not under seal entered into by or on behalf of a com- Stamps. pany generally comes under the following heading in the Schedule to Agreement the Stamp Act, 1870: "Agreement or any memorandum of an agree- not under ment made in England or Ireland under hand only, or made in Scotland without any clause of registration, and not otherwise specifically charged seal. Adhesive stamps. How to be cancelled. Stamp for agreement under seal. Whether a company can with any duty, whether the same be only evidence of a contract, or obligatory upon the parties from its being a written instrument," and accordingly requires a 6d. agreement stamp. By Section 36 of the Stamp Act, 1870, it is provided that the duty of 6d. upon an agreement may be denoted by an adhesive stamp, which is to be cancelled by the person by whom the agreement is first executed. The mode of cancelling is prescribed by Section 24 of the Act, namely: "An instrument, the duty upon which is required or permitted by law, to be denoted by an adhesive stamp, is not to be deemed duly stamped with an adhesive stamp unless the person required by law to cancel such adhesive stamp cancels the same by writing on or across the stamp his name or initials, or the name or initials of his firm, together with the true date of his so writing, so that the stamp may be effectually cancelled, and rendered incapable of being used for any other instrument, or unless it is otherwise proved that the stamp appearing on the instrument was affixed thereto at the proper time." The same section also provides that every person who, being required by law to cancel an adhesive stamp, wilfully neglects or refuses duly and effectually to do so in manner aforesaid shall forfeit the sum of 107. As to stamping an agreement under the seal of a company : It is generally assumed that every agreement by a company under its seal is a deed, and therefore if not otherwise specifically charged with duty by the Stamp Act, 1870, is liable as a "Deed of any kind whatsoever, not described in this schedule" (Schedule to the Act) i.e. requires a 10s. deed stamp: and this appears to be the correct view. It is not every instrument under seal that is a deed, but all the definitions include "a contract in writing sealed and delivered." Thus, in Co. Litt. 161, (b), it is said, "A deed signifieth in the Common Law three things, viz., writing, sealing, and delivering, comprehending a bargain or contract between party and party." So in Comyn's Digest it is said, "A deed is a writing containing a contract, and signed, sealed and delivered by the party." See title "Fait." It is subsequently mentioned that signing is not essential. In Spelman's Glossary, title Factum, a deed is defined as "Scriptum solemne quo firmatur donum, concessio, pactum contractus, et hujus modi." See also the definitions in Cruise's Digest, Tomlin's Law Dictionary, and Wharton's Law Lexicon. It appears extremely difficult to draw any distinction between a contract under the seal of a company and a contract sealed and delivered make a simple by a private person. Nevertheless it is sometimes contended that a company may make a simple contract under its seal. Thus in Arnould on Marine Insurance, 5th ed. (1877), p. 156, the following passage contract under its seal. Occurs: "In a recent case, not reported, in which a rule for a new trial or to enter a verdict for the defendants was obtained on several grounds, and among these on this, that the declaration purported to be on a single contract, whereas the policy was made by a company under seal; when cause came to be shown on that point, Blackburn, J., inquired whether the seal in that case was of any other legal effect than merely the form proper to the company? Counsel for the plaintiff thereupon desisted from arguing the point, and it was not further pressed by the defendants. Roper v. English and Scottish Marine Insurance Co., coram Q. B." So in Ex parte the City Bank, 3 Ch. 758, one of the questions was whether a debenture expressed to be "given under the common seal of the company" was a promissory note. It was contended that, being under seal, it was a deed, and therefore could not be a promissory note, which is a simple contract. It did not become necessary to decide the point, but Page Wood and Selwyn, L.JJ., were both of opinion that the instrument, though under seal, was a promissory note. See also Ex parte Colborne and Strawbridge, 11 Eq. 478. On the other hand, in Enthoven v. Hoyle, 13 C. B. 373; 21 L. J., N. S., C. P. 100, it was held or assumed by the Court of Exchequer Chamber [Parke, Alderson, and Martin, BB., Patterson and Wightman, JJ.] that a debenture under the seal of a company was, though stamped as a promissory note, a deed. So also in Crouch v. Credit Foncier of Crouch v. England, 8 Q. B. 375, Blackburn, J., in delivering the judgment of the Foncier. Court, after referring to the opinions of Page Wood and Selwyn, L.JJ., above cited, expressed doubt whether an instrument under the seal of a corporation could be held to be a promissory note. See also The Queen v. Morton, L. R. 2 C. C. R. 22. Credit It has been held that the mere affixing of a seal to a contract does not Seal affixed make it a deed where it appears not to have been intended to operate does not necessarily make as a deed. Thus, where a contract concluded with the words "to which contract a the parties have set their hands" (not hands and seals), it was held not deed. to be a deed, although seals were set opposite the signatures. Clement v. Gunhouse, 5 Esp. 83. See also Chanter v. Johnson, 14 M. & W. 408. And by analogy it would seem that a contract by a company which concludes, "As witness the hands of the said- and of A. B. on behalf even though the seal of the company," would not be held to be a deed Under the circumstances it seems expedient to stamp a contract Contract under the seal of a company as a deed. It may here be observed that under seal the Commissioners of Inland Revenue consider that every contract stamped as by a company under its seal, if not otherwise chargeable, is liable as a a deed. should be How company should make simple con tract. deed. And every contract under the seal of a company to be filed with the Registrar of Joint Stock Companies must be stamped accordingly before it will be filed. A contract under the seal of a company cannot, it would seem, in any view be liable to the sixpenny stamp duty, for that duty is imposed on agreements "made in England and Ireland under hand only," and it has been held that the words in italics are used to exclude agreements under seal. Chadwick v. Clarke, 9 Jur. 539; 14 L. J., N. S., C. P. 223. Where a company desires to make a simple contract in writing, the proper plan appears to be to procure it to be signed on behalf of the company as above mentioned, p. 5. It will be just as binding as if under scal, and no difficulty can then arise as to the stamp. |