参考答案：

This question requires candidates to consider the authority of company directors and other company officers to enter into binding contracts on behalf of their companies. Article G0 of Table A model articles of association provides that the directors of a company may exercise all the powers of the company. It is important to note that this power is given to the board as a whole and not to individual directors and consequently individual directors cannot bind the company without their being authorised in some way so to do. There are three ways in which the power of the board of directors may be extended to individual directors. (a) The individual director may be given express authority to enter into a particular transaction on the company’s behalf. To this end, Article GB allows for the delegation of the board’s powers to one or more directors. Where such express delegation has been made then the company is bound by any contract entered into by the person to whom the power was delegated. However, in the present situation it does not appear that Len has been expressly given the power to enter into the contract with Mo, and so the company cannot be made liable on this basis. (b) A second type of authority that may empower an individual director to bind his company is implied authority. In this situation, the person’s authority flows from their position. Article HD provides for the board of directors to appoint a managing director and Article GB also allows the board of directors to delegate to any managing director such powers as they consider desirable to be exercised by that person. Thus the board of directors may expressly confer any of their powers on the managing director as they see fit. The mere fact of appointment, however, will mean that the person so appointed will have the implied authority to bind the company in the same way as the board, whose delegate he or she is. Outsiders, therefore, can safely assume that a person appointed as managing director has all the powers usually exercised by a person acting as a managing director. Implied actual authority to bind a company may also arise as a consequence of the appointment of an individual to a position other than that of managing director. In Hely-Hutchinson v Brayhead Ltd (AIFH), although the chairman and chief executive of a company acted as its de facto managing director, he had never been formally appointed to that position. Nevertheless,he purported to bind the company to a particular transaction. When the other party to the agreement sought to enforce it, the company claimed that the chairman had no authority to bind it. It was held that, although the director derived no authority from his position as chairman of the board, he did acquire such authority from his position as chief executive and thus the company was bound by the contract he had entered into on its behalf. Once again, however, it would appear that Mo cannot make use of this method of fixing Katch Co with liability for his contract as Len has not been appointed to any executive office in the company. (c) The third way in which an individual director may possess the power to bind his company is through the operation of ostensible authority, which is alternatively described as apparent authority or agency by estoppel. This arises where an individual director has neither express nor implied authority. Nonetheless, the director is held out by the other members of the board of directors as having the authority to bind the company. If a third party acts on such a representation, then the company will be estopped from denying its truth. In Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd (AIFD), although a particular director had never been appointed as managing director, he acted as such with the clear knowledge of the other directors and entered into a contract with the plaintiffs on behalf of the company. When the plaintiffs sought to recover fees due to them under that contract, it was held that the company was liable: a properly appointed managing director would have been able to enter into such a contract and the third party was entitled to rely on the representation of the other directors that the person in question had been properly appointed to that position. The situation in the problem is very similar to that in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd. The board of Katch Co has permitted Len to act as its managing director, and he has even used that title. The board has therefore acquiesced in his representation of himself as their managing director and consequently they and Katch Co are bound by any contracts he might make within the scope of a managing director’s implied authority. As entering into a contract to draw up plans would clearly come within that authority, Katch Co will be liable to pay Mo or face an action for breach of contract.