COMPANY LAW, CONTRACT – Unauthorised contract – Whether unauthorised contract is binding on the company or corporation:

PRINCIPLES

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COMPANY LAW, CONTRACT – Unauthorised contract – Whether unauthorised contract is binding on the company or corporation:

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It is an elementary rule of the law of contract that an agreement entered into by a member of a corporation aggregate, who is not duly authorised by the corporation, or by a stranger to the corporation is not binding on the corporation.  The same principle of law applies to an arbitration agreement. We refer to Russel on Arbitration, p. 30 where the learned author wrote thus: – “Corporation aggregate, subject to the restrictions mentioned above, may be parties to arbitration as well as individuals.  The act, however, must be that of the corporation as a whole.  A dean without his chapter, or a mayor without his commonalty, or the master of a college or hospital without his fellows cannot, by a submission, bind the corporation for the same reason that he cannot bind it by any other contract.” Per BELLO, J.S.C. in ALHAJI SALAMI KATIBI OPEBIYI V. SAKARIYAWU KELANI NOIBI (1977-LCER-1134-SC) at P. 11, Paras. C-D.

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