This is the organic theory or the alter ego doctrine.
It is a principle of Company Law that attempts to connect the living to the non-living.
This principle imputes the state of mind of responsible officers of the company to the company.
Under the organic theory, the thoughts and deeds of responsible officers of the company are deemed to be the thoughts and deeds of the company, i.e., the company thinks and acts through these persons.
This theory attributes to the company the knowledge of the responsible officers. In
Lennards Carrying Co Ltd V Asiatic Petroleum Co. Ltd, the managing director of the company knew or ought to have known that the ship was unseaworthy but took no steps and as a consequence the ship and its cargo were lost. It was held that the company was liable for the loss as it was aware of the ship‟s unseaworthiness. The managing director‟s knowledge was attributed to the company.
The thoughts of responsible officers are deemed to be the thoughts of the company. It was son held in Bolton Engineering Co Ltd V Graham and Sons.
If responsible officers of the company delegate to junior officers the company thinks and acts through the delegate.
However, the thoughts and deeds of junior officers of the company are not attributable
to the company. It was so held in Tesco Supermarkets Ltd V Natrass Ltd.