5/11/2011 Scope of s 5B(3) Difference between corporate capacity and directors' authority. Company has capacity to act outside objects clause:see s 5A. Directors do not have authority under memorandum to act outside objects clause:see s 5B(1). Company might not be bound to transaction outside objects clause if third party has notice of directors acting outside of authority. Third party will not have constructive notice of objects clause:see s 5C(partial abolition of doctrine of constructive notice). 11 Operation of ss 5B(3)and 5C:examples Scenario 3:clothing manufacturer not aware of restriction in objects clause. Scenario 4:clothing manufacturer does know of restriction in objects clause (i.e.actual notice). 12 65/11/2011 6 11 Scope of s 5B(3) • Difference between corporate capacity and directors’ authority. • Company has capacity to act outside objects clause: see s 5A. • Directors do not have authority under memorandum to act outside objects clause: see s 5B(1). • Company might not be bound to transaction outside objects clause if third party has notice of directors acting outside of authority. • Third party will not have constructive notice of objects clause: see s 5C (partial abolition of doctrine of constructive notice). 12 Operation of ss 5B(3) and 5C: examples • Scenario 3: clothing manufacturer not aware of restriction in objects clause. • Scenario 4: clothing manufacturer does know of restriction in objects clause (i.e. actual notice)