Select the statement that best reflects the rule in Turquand’s
Case:
Group of answer choicesBecause the constitution of public companies
is lodged with ASIC, outsiders are deemed to have notice of the
manner in which a company should operate and therefore must suffer
the loss if the contract was not correctly executed
The rule protects an outsider where, for example, directors act
outside their authority but this was not apparent from the
constitution or other public documents of the company. In other
words, the outsider can assume the internal proceedings of the
company were properly carried out.
The only directors who can bind a company are those with actual or
implied authority. A director cannot bind a company when the
outsider simply develops a belief that the director has authority,
as that belief may not be founded on reason and evidence.
The rule in Turquand’s Case has been abolished by the Corporations
Act 2001.
Ans.
The 2nd statement that is " The rule protects an outsider where, for example, directors act outside their authority but this was not apparent from the constitution or other public documents of the company. In other words, the outsider can assume the internal proceedings of the company were properly carried out. " Best reflect the rule of turquand's case.
Because in Turquand's case the court States a judgement that protect the outsider from losses due to company's indoor management rule . In the Turquand's case the director are allowed to borrow but didn't specify the limit if borrowing and the bank was not aware of it as it was company's indoor management rule so the court passed the judgement that protect the outsider from that.
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