Corporate Matters — January 2014: dealing with conflicted directors
A recent Court of Appeal decision has lessons for both solicitors and non-executive directors on how to manage conflict situations.
In Newcastle International Airport Ltd v Eversheds LLP, the defendant solicitors, Eversheds, had been instructed to draft the terms of new employment contracts for two executive directors of the claimant, Newcastle International Airport Ltd (NIAL). These instructions were the product of a meeting between the executive directors and the chair of the Remuneration Committee. Eversheds provided finalised drafts to the chair of the Remuneration Committee for signing following negotiations with the two directors. The contract contained terms that allowed for substantial bonuses and, in one case, a release from certain restrictive covenants that had been part of the directors’ existing contracts. When the full extent of the bonus liability became apparent, NIAL sued Eversheds, arguing that the solicitors were negligent in taking instructions from the same executive directors on the provisions of the service agreements without consultation with the Remuneration Committee.
The High Court disagreed. The court found that the chair of the Remuneration Committee had ‘held out’ that the directors were specifically authorised to communicate with Eversheds direct on NIAL’s behalf. Once this apparent authority as agent was established at the outset, Eversheds was under no obligation to continually check with NIAL that the agent had actual authority to act on particular provisions of the draft contracts…
If you are registered and logged in to the site, click on the link below to read the rest of the Walker Morris briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
What’s coming up: the major cases, government policy changes, and litigation and dispute resolution legislation to look out for in 2015
We know that it is important for businesses to be aware of upcoming legal and regulatory changes, so that they can plan ahead. View Walker Morris’s summary of some of the key upcoming decisions in major cases, changes to government policy and forthcoming legislation relating to litigation and dispute resolution in an easy-to-use table by clicking the link below: http://www.walkermorris.co.uk/whats-coming
The answer is yes, if they were not created as part of a genuine attempt to settle an existing dispute.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.