68
2.7
other words he would have to be deemed not to
know things which he actually did know a legislative
expedient which seems to us highly undesirable.".
In view of these difficulties the Jenkins Committee saw no
sufficiently cogent reason for adopting the proposed attribution to
companies of all the powers of a natural person.
of their Report, they recommended that:-
17
1: (a)
(b)
Instead, in paragraph 42
a contract entered into between a company and
another party (including a shareholder contracting
otherwise than in his capacity as a shareholder)
contracting with the company in good faith should
not be held invalid as against the other party on
the ground that it was beyond the powers of the
company: he should not, however, be allowed to
enforce the contract without submitting to perform
his part of it so far as it is unperformed;
in entering into any such contract the other party
should be entitled to assume without investigation
that the company is in fact possessed of the necessary
power; and should not by reason of his omission so to
investigate be deemed not to have acted in good faith,
or be deprived of his right to enforce the contract
on the ground that at the time of entering into it he
had constructive notice of any limitations on the
powers of the company, or on the powers of any director
or other person to act on the company's behalf, imposed
by its memorandum or articles of association;
169