Royal British Bank v Turquand (1856)

Company Law · Pre-Incorporation Contracts

Facts.

A company’s deed allowed borrowing on bonds if authorised by a resolution of members. The company borrowed from the bank; no such resolution had been passed.

Issue.

Was the company bound though the internal resolution was missing?

Held.

Yes. The bank, having read the public documents which permitted borrowing on resolution, could assume the resolution had been duly passed.

Why it matters.

Founds the doctrine of indoor management — the outsider’s shield that balances constructive notice.

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