Company Contracts and Conundrums: When is a Board Not a Board and When is a Director Not a Person?

Abstract

The recent case of Smith v Henniker-Major & Co [2002] BCC 544 (Ch D) and [2002] 2 BCLC 655 (CA) examined the scope of the UK legislation governing the authority of the board of directors to act for the company, which implements Article 9(2) of the First European Company Law Directive. In particular two questions were considered in relation to section 35A of the Companies Act 1985: does it affect the application of this section if the board was inquorate when it purported to act for the company, and can a director of the company rely on this statutory protection when contracting with the company? This article examines the answers which were given in Smith v Henniker- Major, suggests that the answers are problematic and unsatisfactory on various levels, and puts forward an alternative analysis of these issues.