n Transactions of the Centre for Business Law - External relations / Eksterne verhoudings : caput 5
|Article Title||External relations / Eksterne verhoudings : caput 5|
|© Publisher:||University of the Free State|
|Journal||Transactions of the Centre for Business Law|
|Publication Date||Jan 2010|
|Pages||107 - 146|
A close corporation is a legal person created under an general enabling Act by registration in compliance with statutory requirements. There has been a complete break with the traditional principles determining the validity of contracts with corporations created under a general enabling Act. A close corporation has the capacity and powers of a natural person of full capacity. Consequently its founding statement does not contain an objects clause. In addition there is no constructive notice of the particulars of either the founding statement or an association agreement (if any). Hence the traditional ultra vires doctrine and doctrine of constructive notice are irrelevant to the question of whether a close corporation is bound by a particular contract. The answer depends on the authority of the person acting for the close corporation in the particular transaction.
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