Hopkins v TL Dallas Group [2004] EWHC 1379 (Ch)

Director does not have actual authority where he acts for:

1. Improper purposes

2. Or in bad faith

Thus where director acts contrary to interests of his company, does not have actual authority.

This may be case where, e.g. director signs contracts which are very onerous and disadvantageous for his company

Director did not have actual authority to sign letters.

• Did not fall within scope of his implied authority as director

• He acted in breach of fiduciary duty when doing so

In addition, Company B could not rely on ostensible authority

• Very facts which amounted to breach of directors’ duty put Company B on notice of lack of authority

• I.e. transaction were so disadvantageous to director’s own company that Company B should have known director was acting in breach of duty

  • Or at the least, should have asked the other directors to confirm validity of transaction

• Thus party cannot rely on ostensible authority where he is on notice of lack of authority