Personal liability of directors

A director of a company may be authorised to sign documents on behalf of the company. Such authority may be ‘actual’, in that is conferred by or pursuant to the company’s articles of association, or it may, depending on the circumstances, be ‘implied’. However, just because a director signs a document, it does not necessarily mean that the company is party to it – it is possible, depending on the terms of the document, that the director is signing in a personal capacity. In the case of ambiguity, the court will look at the facts and context of the document in question to try to establish who is the contract party: the company or the individual signatory.

In Muneer Hamid (t/a Hamid Properties) v Francis Bradshaw Partnership, Mr Hamid was the sole director and shareholder of a company (the Company) which traded under his name. He had bought land in his own name and engaged the defendant’s engineers to develop a new showroom. The letter setting out his instructions was on Company notepaper (which included the Company’s address, email address and website but not the company name, number or place of registration, elements that are obliged to appear on company business letters pursuant to the Companies (Trading Disclosures) Regulations 2008) and used the pronoun ‘we’ rather than ‘I‘. He signed the letter and typed his own name following the Company trading name. He did not indicate that he was signing on behalf of the Company.

When a dispute arose between the parties, the defendants argued that the contract was with the Company rather than Mr Hamid personally…

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