5/11/2011 Royal British Bank v Turquand [1843-60]All ER Rep435 Persons dealing with a company in good faith may assume that acts within its constitution and powers have been properly and duly performed and that the persons are not bound to inquire whether acts of internal management have been regular. Bank company loan Articles allowed the co to borrow money with the approval of the general meeting Loan signed by directors for f2K,without general meeting approval Held:bank could still enforce loan ·Cf Table A reg81 17 Royal British Bank v Turquand [1843-60]All ER Rep435 Jervis CJ:"the [constitution]allows the directors to borrow on bond such sum or sums of money as shall from time to time,by a resolution passed at a general meeting of the co,be authorized to be borrowed... "the party here,on reading the deed of settlement, would find,not a prohibition fro borrowing,but a permission to do so on certain conditions.Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done." 2 noteworthy qualifications to this "indoor management rule 18 95/11/2011 9 17 Royal British Bank v Turquand [1843-60] All ER Rep 435 • Persons dealing with a company in good faith may assume that acts within its constitution and powers have been properly and duly performed and that the persons are not bound to inquire whether acts of internal management have been regular. Bank company loan • Articles allowed the co to borrow money with the approval of the general meeting • Loan signed by directors for £2K, without general meeting approval • Held: bank could still enforce loan • Cf Table A reg 81 18 Royal British Bank v Turquand [1843-60] All ER Rep 435 • Jervis CJ: “the [constitution] allows the directors to borrow on bond such sum or sums of money as shall from time to time, by a resolution passed at a general meeting of the co, be authorized to be borrowed …” • “the party here, on reading the deed of settlement, would find, not a prohibition fro borrowing, but a permission to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done.” • 2 noteworthy qualifications to this “indoor management rule