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ACCA Applied Skills · Corporate and Business Law (Global) · Other company officers

Karim is company secretary of Delta Ltd. Without any board authority, he orders office furniture from Oak Supplies for the company's administrative needs, telling Oak he is acting for Delta. Delta refuses to pay, saying he had no authority. What is the likely legal position?

Delta is likely bound by the contract. A company secretary is an officer with apparent authority to enter administrative contracts, such as ordering office furniture. A third party dealing in good faith can rely on that authority, though it would not extend to trading or borrowing matters.

  1. ADelta is likely bound, because a secretary has apparent authority to make contracts relating to the company's administrative affairsCorrect
  2. BDelta is not bound, because a secretary has no authority to make any contract
  3. CKarim alone is bound, because only directors can bind a company

Explanation

Modern case law treats the secretary as an officer with ostensible authority for routine administrative matters, such as ordering office equipment or hiring staff for the office. Delta will therefore probably be liable. Trading or borrowing contracts would fall outside this authority.

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