Corporate contracts: Examining the powers and limitations of company directors and officers
Babajide S Shoroye
From the provisions of the UK Companies Act 2006 and the Nigerian Companies Act 2020, directors and officers may exercise powers to make corporate contracts involving business that is outside the object clause and beyond the powers of the company. This statutory latitude is a notable departure from the position at common law. In this article, we analyse the powers of directors and officers to enter into contracts in the name and on behalf of the company, and determine the nature, scope and limitations of the powers. This article finds that the limitations on the powers of directors and officers to consummate corporate contracts are anchored on common law fiduciary relationship between agent and principal. Similarly, the legal consequences that flow from directors’ and officers’ wrongful exercise of corporate powers reflect the principles of the law of agency relating to breach of fiduciary duties. This article argues that, with respect to corporate contracts vis-a-vis the powers of directors and officers, the functional relationship is to be determined more within common law of agency than statutory provisions.