Case Management Essay

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Indoor Management Rule 1. Indoor management rule. Royal British Bank v Turquand; A rule was formulated to the effect that while a third party who dealt with the company was taken to be aware of the contents of that company’s public documents, they were not bound to ensure that the company’s internal proceedings were properly carried out. See Morris v Kanssen [1946]AC 459 at 474. “A person dealing with a company in good faith may assume that acts within its constitution have been duly performed and are not bound to inquire whether acts of internal management have been regular.” 2. Northside Developments Pty. Ltd v Registrar-General (1990) 170 CLR 146; Northside mortgaged its land to Barclays, the mortgage was executed…show more content…
The organisational structure at the time was that Ms Dhiri was the bank officer to whom request (the ship charterers) would be communicated. That response involving her signature of the letters would signify to third party agreement of what was requested. There were no procedures in the bank that she was to seek legal advice about the manner and form of the banks signature. She was placed in a position to sign and stamp the documents but without any internal check. Court held that the bank had made a representation about the authority of Dhiri and by failing to establish proper safeguards to protect itself from unauthorised conduct. 5. Story v Advance Bank(1993) 31 NSWLR 722 Mr & Mrs Story were directors and shareholders of F Pty Ltd. Mr S was the company secretary. S borrowed $1 million to start a business from the bank and partly for household use. The bank took a third party mortgage from F company over the matrimonial home. The bank searched against the company and found that Mr & Mrs S were directors and company secretary. The mortgage bore the seal of F company and the signature of Mr S. Mr S forged his wife’s signature. After the loan was not repaid, the bank tried to get possession of the home. Held: That no employee of the bank had actual knowledge that the mortgage had not been duly executed. The statutory assumptions protected the bank. 6. Lennard’s Carrying Co. v Asiatic Petroleum A ship and her cargo were
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