In Ferguson V Wilson (1866) Cairns L. J. observed that “the company itself cannot act in its own person , for it has no person, it can only act through directors and the case is, as regards those directors, merely the ordinary case of principal and agent. Wherever an agent is liable those directors would be liable, where the liability would attach to the principal and the principal only, the liability is the liability of the company.” In what circumstances may a director be held personally liable in lieu of or in addition to the company?

Breach of warranty of authority, i.e., where he has added beyond his powers unknown to the other party. As was the case in West London Commercial Bank Ltd. V. Kitson [1884] where a director had accepted bills on behalf of the company without authority to do so.

Where he has acted fraudulently as against the other party. As was the case in OrkinBros. Ltd V Bell [1921] where directors ordered goods on credit while aware that it had no capacity to pay. It was held that they were personally liable for acting fraudulently.

 Where a director assumes a direct duty of care to a 3rd party dealing with the company. As was the case in Fairline Shipping Corporation V Adamson [1975].

 Where he has bound himself personally for the liability of the company e.g. as a surety or as maker or endorser of a bill.

 Where the company‟s name is not published or is misdescribed in a negotiable
instrument signed by a director.

Where he has contracted on behalf of an illusory company. As was the case in Harill V Davis.

Where he has formed a company or used it for a wrong purpose. It was so observed in Rainbow Chemical Works Ltd V Belvedere Fish Guano Co Ltd [1921].

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