A company incorporated by a private Act for the construction of a tramway, with a nominal capital, which was never offered to the public, but which was taken up partly by the promoters of the company, and to the extent of the remainder of the shares was acquired by the contractor in payment of the price of the work performed, entered into a contract for the remainder of the work with the same contractor.
A shareholder sought to reduce this contract (1) on the ground of fraud, alleging that the majority of the shareholders who voted in favour thereof were nominees of the contractor, and had obtained their shares gratuitously and for the purpose of voting in his favour; (2) on the ground of ultra vires, as the contract had not been offered to competition as required by a clause in a contract which was scheduled to the company’s Act.
Held (aff. judgment of the First Division) (1) that the contractor’s influence in the company had been legitimately acquired; and (2) that the pursuer not being a party to the contract, which provided for competition, he had no title to insist in the plea of ultra vires.
Judges:
Lord Chancellor (Herschell) and Lords Watson, Ashbourne, Morris, and Shand
Citations:
[1893] UKHL 944
Links:
Jurisdiction:
Scotland
Contract, Company
Updated: 31 January 2022; Ref: scu.633302