It has been held that the memorandum and Articles of Association of a company shall, when registered, bind the company and the members to the same extent as if the documents has been signed and sealed by each member and contained covenants an the part of each member to observe all the provisions of the memorandum and the articles.Explain the effect of this provision on the relationship between shareholders and their company and between shareholders themselves.

• This provision is to the effect that when the Articles are registered there comes into being a contract between the company on one hand and shareholders on the other to observe the provisions of the articles.
• Either party is free to sue the other for non compliance with the provisions of the articles. Welton V. Sattery.
• Hickman V. Kent or Romney Mash Sheep Breeders Association

• The company and its members have rights and subject to obligations.
• Rights conferred by the contract are only enforceable by members qua members ElleyV. Positive Government Life Assurance Co., Beattie V. Beattie.
• The contract is unenforceable by an outsider.
• The contract is subject to the memorandum and provisions of the Companies Act.
• The terms of the contract keep on changing from time to time as and when the company alters the Articles.
• Courts have observes in Obiter that a second contract is created between each member and every other i.e. members inter se.
• The decision in Wood V. Odessa Water Works and Quin and Axtens Ltd. V. Salmon are cited for this argument.

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