The development and reform of the rules regulating authority to contract on behalf of companies in South African and English Law

Van Niekerk, Julian Jesse

The development and reform of the rules regulating authority to contract on behalf of companies in South African and English Law

Doctoral Thesis

2021

Abstract

The rules regulating corporate representation relating to the conclusion of contracts have vexed courts for over a century. Even today this area of law is recognised as one of complexity, with the principles of agency, court-made company law doctrines and legislative provisions sitting side by side, with no sure guide as to their interaction. In South Africa, this sense of uncertainty is particularly acute, given the fact that there is disagreement over the nature of the applicable common law rules, the Companies Act No 71 of 2008 has introduced radical changes into this area of law and our Constitutional Court has recently made pronouncements which have brought settled agency law principles into question. This thesis attempts to lay the groundwork for an understanding of corporate contracting under the Companies Act, taking into account relevant historical, judicial and legislative developments in English and South African law over the last 150 years. In particular, this thesis argues that an approach to corporate contracting which focusses on the third party's perspective, which is rooted in the appearances of (ostensible) authority of the company's representatives, came to dominate over the perspective of the company, which is rooted in the constitutional (actual) authority of its representatives. The implication of this shift has been the gradual de-emphasising of the corporate constitution in relation to corporate contracting. This shift has manifested in both judicial analysis (by courts placing the principles of agency, in particular ostensible authority, at the centre of unauthorised contracting cases) and statutory intervention (by the introduction of sections which expressly make constitutional provisions irrelevant to third parties). Taking into account these developments, it is submitted that the Companies Act has continued the abovementioned trend by introducing sections which further entrench the 'third party perspective' of corporate contracting. Moreover, it is averred that the Companies Act may have overturned case law which limits the protection available to third parties contracting with companies in particular circumstances.

Keywords

Commercial Law

Reference:

Collections

PhD / Doctoral

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