The Basis Of The Contract Between The Company And Its Members Case Study - 2

The Basis Of The Contract Between The Company And Its Members - Case Study ExampleEnforcement of contract arises when hotshot of the typeies commits a breach of terms and conditions of the contract. Section 14 of the Company Act 2006 (CA) makes the articles of association, on registration of the company, to become a contract between the company and members and it has been observed by Stein LJ in Bratton Seymour service Co Ltd v Oxborough1that it is a statutory contract of special nature with distinctive features2 Within the positioning of company law, it is of special nature because the terms of contract smoke be varied by special resolution and its enforcement by the members is limited to a sure extent and no outsider has any rights. And section 33(1) of the CA provides for a number of ways to be different from a normal contract. The provisions of the organization of a company bind the company and its members in a manner as if there are covenants on the part of the company an d on the part of each of its members to comply with those provisions. This position emerges once the company is registered as set in section 33 (1) of the CA. It, therefore, follows that provisions in the articles are enforceable by the company against its members, by a member against another member, and by a members against the company limited to their membership rights of attending meetings, voting, eligibility for dividend and to assert the rights to ensure that the company is managed as per the constitution.Usually, there will be a condition in the articles to provide for referring by the company to arbitration disputes between the company and members. A company can enforce compliance of this obligation. This is supported by the decision in Hickman v Kent or Romney Marsh Sheep-Breeders Association where the court upheld the relevant clause in the articles for arbitration.