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    Doctrine of Constructive Notice

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    Rahul Chopra
    The rule of constructive notice was established by the House of Lords to hold shareholders liable and apply partnership rules in the absence of constructive liability. The objective was to make company information like articles available to the public so outsiders would be deemed to know about internal procedures in a company's constitution. British courts have observed this doctrine has a drastic effect on outsiders as they are expected to know a company's internal rules, and if not followed, could render contracts unenforceable even if within the company's capacity, as seen in Knopp v. Thane Investment Limited.

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    Doctrine of Constructive Notice

    Uploaded by

    Rahul Chopra
    101 views1 page
    The rule of constructive notice was established by the House of Lords to hold shareholders liable and apply partnership rules in the absence of constructive liability. The objective was to make company information like articles available to the public so outsiders would be deemed to know about internal procedures in a company's constitution. British courts have observed this doctrine has a drastic effect on outsiders as they are expected to know a company's internal rules, and if not followed, could render contracts unenforceable even if within the company's capacity, as seen in Knopp v. Thane Investment Limited.

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    doctrine of constructive notice from companies act,2013

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    The rule of constructive notice was established by the House of Lords to hold shareholders liable and apply partnership rules in the absence of constructive liability. The objective was to make company information like articles available to the public so outsiders would be deemed to know about internal procedures in a company's constitution. British courts have observed this doctrine has a drastic effect on outsiders as they are expected to know a company's internal rules, and if not followed, could render contracts unenforceable even if within the company's capacity, as seen in Knopp v. Thane Investment Limited.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    101 views1 page

    Doctrine of Constructive Notice

    Uploaded by

    Rahul Chopra
    The rule of constructive notice was established by the House of Lords to hold shareholders liable and apply partnership rules in the absence of constructive liability. The objective was to make company information like articles available to the public so outsiders would be deemed to know about internal procedures in a company's constitution. British courts have observed this doctrine has a drastic effect on outsiders as they are expected to know a company's internal rules, and if not followed, could render contracts unenforceable even if within the company's capacity, as seen in Knopp v. Thane Investment Limited.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
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    The rule of constructive notice was laid down by the House of Lords in Ernest v.

    Nicholls [10] and was further explained by House of Lords in Mahony v. East Holyford
    Mining Co case. Lord Wensleydale in Ernest case took the view that the rules of partnership
    would apply in the absence of the doctrine of constructive liability. The objective was to hold
    the shareholders liable. The observation of Lord Wensleydale is not clear. However, it appears
    that he seems to have considered that it was to avoid this result that the legislature saw fit to
    require a company to register articles and so to make available the world information so as to
    make available to the world information as to who were the persons authorized to bind the
    shareholders.

    The British Courts in several cases observed that the doctrine of constructive notice has a
    potentially drastic effect on outsiders as they were deemed to know about any internal
    procedures in the constitution as it is a public document. So, sometimes, even though an action
    is within the capacity of the company, it may be outside the powers of the individual
    representing the company because an internal procedure was not complied with. For example
    in Knopp v. Thane Investment Limited (2003) the court found the directors failure to
    observe the articles rendered a contract contrary to the articles unenforceable. If the doctrine
    of constructive notice was applied strictly the outsider could not complain about the lack of
    authority as they were deemed to know that there was a limit on the actual authority of the
    companys agent.

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