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Page 128

CHAPTER 11
DIRECTORS

they are guilty of negligence and liable accordingly. Their duties may be summarised as follows:
1. They must act honestly.
2. They must exercise such skill and diligence as an ordinary
man might be expected to take on his own behalf.
3. They are not liable for errors of judgment. 4. They are not bound to give continuous
company's affairs.
5. In case of duties properly left to some official of the company, they are, in the absence of grounds for suspicion, justified in trusting that official to perform his duties honestly.
6. Apart from the general duties summarised above, their duties depend on the nature of the company's business and the manner in which the work is distributed between the directors and the other officials of the company, provided that the distribution is reasonable and not inconsistent with the provisions of the articles.

In re City Equitable Fire Insce. Co., [1925] Ch. 407. The directors of an insurance company left the management of the company's affairs almost entirely to B., the managing director. Owing to B.'s fraud a large amount of the company's assets disappeared. Items appeared in the balance sheet under the headings of " loans at call or at short notice " and " cash at bank or in hand," but the directors never enquired how these items were made up. Had they done so, they would have discovered that the loans were chiefly to B. and to the company's general manager, and that the " cash at bank or in hand " included £73,000 in the hands of the company's stockbrokers, in which B. was a partner. Held, the directors were negligent. [In this case the articles protected the directors from liability except in case of wilful neglect or default, and consequently the directors were not held liable. S. 152 now makes any such article void.]

If a director signs a cheque without enquiring as to the purpose for which it is required, and it is in fact required for an ultra vires purpose, he is negligent and liable to replace the amount of the cheque.44 But if the cheque comes before him in the regular course of business and is apparently for a proper purpose, he is not liable if it is misapplied.
Romer, J., in Re City Equitable Fire Insce. Co. (supra), laid down the following duties as to signing cheques:
1. If a cheque comes before the director in the regular way according to the usual practice of the company for a specific purpose apparently regular, the director is not responsible for seeing that the money is in fact required or is subsequently applied for that purpose.
2. Before signing, the director should satisfy himself that a resolution of the board is passed authorising the cheque or, if it is signed between board meetings, that it is confirmed at the next board meeting.

44 Joint Discount Co. v. Brown (1869), L. R. 8 Eq. 381.

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where is HTML where is HEAD where is TITLE they are guilty of negligence and liable accordingly. Their duties may be summarised as follows: 1. They must act honestly. 2. They must exercise such s what time is it and diligence as an ordinary man might be expected to take on his own behalf. 3. They are not liable for errors of judgment. 4. They are not bound to give continuous company's affairs. 5. In case of duties properly left to some official of what is company, they are, in what is absence of grounds for suspicion, justified in trusting that official to perform his duties honestly. 6. Apart from what is general duties summarised above, their duties depend on what is nature of what is company's business and what is manner in which what is work is distributed between what is directors and what is other officials of what is company, provided that what is distribution is reasonable and not inconsistent with what is provisions of what is articles. In re City Equitable Fire Insce. Co., [1925] Ch. 407. what is directors of an insurance company left what is management of what is company's affairs almost entirely to B., what is managing director. Owing to B.'s fraud a large amount of what is company's assets disappeared. Items appeared in what is balance sheet under what is headings of " loans at call or at short notice " and " cash at bank or in hand," but what is directors never enquired how these items were made up. Had they done so, they would have discovered that what is loans were chiefly to B. and to what is company's general manager, and that what is " cash at bank or in hand " included £73,000 in what is hands of what is company's stockbrokers, in which B. was a partner. Held, what is directors were negligent. [In this case what is articles protected what is directors from liability except in case of wilful neglect or default, and consequently what is directors were not held liable. S. 152 now makes any such article void.] If a director signs a cheque without enquiring as to what is purpose for which it is required, and it is in fact required for an ultra vires purpose, he is negligent and liable to replace what is amount of what is cheque.44 But if what is cheque comes before him in what is regular course of business and is apparently for a proper purpose, he is not liable if it is misapplied. Romer, J., in Re City Equitable Fire Insce. Co. (supra), laid down what is following duties as to signing cheques: 1. If a cheque comes before what is director in what is regular way according to what is usual practice of what is company for a specific purpose apparently regular, what is director is not responsible for seeing that what is money is in fact required or is subsequently applied for that purpose. 2. Before signing, what is director should satisfy himself that a resolution of what is board is passed authorising what is cheque or, if it is signed between board meetings, that it is confirmed at what is next board meeting. 44 Joint Discount Co. v. Brown (1869), L. R. 8 Eq. 381. where is meta name="keywords" content="old books, Free book , free book offer , free audio books , free coloring book pages , free book reports , free audio book , audio books free download , book free , free guest book , books free , free book summaries , download free audio books , free childrens books." where is where are they now rel="stylesheet" type="text/css" href="../../style.css" where is meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1" where is BODY bgColor=#ffffff text="#000000" where are they now ="#000000" v where are they now ="#FF0000" where is div align="center" where is strong where is strong where is a href="http://www.aaoldbooks.com" Books > where is a href="../default.asp" title="Book" Old Books > where is strong where is a href="default.asp" Poetry Northwest (1959) where is table width="700" border="1" align="center" cellpadding="15" cellspacing="0" where is center where is tr where is td width="160" align="center" valign="top" where is div align="center" where is td align="center" valign="top" where is div align="left" where is div align="center" where is p align="left" Page 128 where is strong CHAPTER 11 DIRECTORS where is p align="justify" they are guilty of negligence and liable accordingly. Their duties may be summarised as follows: 1. They must act honestly. 2. They must exercise such s what time is it and diligence as an ordinary man might be expected to take on his own behalf. 3. They are not liable for errors of judgment. 4. They are not bound to give continuous company's affairs. 5. In case of duties properly left to some official of what is company, they are, in what is absence of grounds for suspicion, justified in trusting that official to perform his duties honestly. 6. Apart from what is general duties summarised above, their duties depend on what is nature of what is company's business and what is manner in which what is work is distributed between what is directors and what is other officials of what is company, provided that what is distribution is reasonable and not inconsistent with what is provisions of what is articles. In re City Equitable Fire Insce. Co., [1925] Ch. 407. what is directors of an insurance company left what is management of what is company's affairs almost entirely to B., what is managing director. Owing to B.'s fraud a large amount of what is company's assets disappeared. Items appeared in what is balance sheet under what is headings of " loans at call or at short notice " and " cash at bank or in hand," but what is directors never enquired how these items were made up. Had they done so, they would have discovered that what is loans were chiefly to B. and to what is company's general manager, and that what is " cash at bank or in hand " included £73,000 in what is hands of what is company's stockbrokers, in which B. was a partner. Held, the directors were negligent. [In this case what is articles protected what is directors from liability except in case of wilful neglect or default, and consequently what is directors were not held liable. S. 152 now makes any such article void.] If a director signs a cheque without enquiring as to what is purpose for which it is required, and it is in fact required for an ultra vires purpose, he is negligent and liable to replace what is amount of what is cheque.44 But if what is cheque comes before him in what is regular course of business and is apparently for a proper purpose, he is not liable if it is misapplied. Romer, J., in Re City Equitable Fire Insce. Co. (supra), laid down what is following duties as to signing cheques: 1. If a cheque comes before what is director in what is regular way according to what is usual practice of what is company for a specific purpose apparently regular, what is director is not responsible for seeing that what is money is in fact required or is subsequently applied for that purpose. 2. Before signing, what is director should satisfy himself that a resolution of what is board is passed authorising what is cheque or, if it is signed between board meetings, that it is confirmed at what is next board meeting. 44 Joint Discount Co. v. Brown (1869), L. R. 8 Eq. 381. where is Server.Execute("_SiteMap.asp") %

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