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The law of contract

The ability of a company to contract

A company can enter into contracts in its own company name when it comes into
existence.

Nowadays companies can contract for any business purpose. Any restriction will be
by internal arrangements.

If the directors ignore a restriction the consequences are:

 The shareholders can apply to court to stop the directors from proceeding
where the directors are about to take the company into a contract by exceeding
their authority.

 If the directors are not prevented from exceeding their authority then any
contract entered into is enforceable by both the company and the outsider. In
addition the directors may be sued by the company for breach of duty.

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