Civil Engineering Reference
In-Depth Information
3.3.3 Aliens
It is the position in Scots law that, conforming to the Rome Convention, a contract
made during a period of residence in Scotland cannot be set aside on the ground that
one of the parties was an alien who lacked contractual capacity under his or her own
legalsystemunlessitisprovedthattheotherpartyknewoftheincapacityorwas
negligently unaware of it. This principle is incorporated into the Scottish legal system
by s.2 of the Contracts (Applicable Law) Act 1990.
3.3.4 Corporate bodies
A corporate body is a distinct legal entity which is entirely separate from the mem-
bers of the corporation. A corporate body can enter into contracts and can sue and
be sued. Corporate bodies will contract through their agents. The agent must have
express or ostensible authority to bind the corporation to the contract he purports to
make. Directors of companies have ostensible power and authority to bind the com-
pany in transactions.
A corporate body created by statute, or exercising statutory powers, cannot enter
into any contract or dispose of its funds in any way which is not sanctioned by the
statute or reasonably incidental to the powers conferred. To do so would be
ultra
vires
, i.e. beyond its powers. Where a party is dealing with a company incorporated
under the Companies Acts, the position regarding
ultra vires
has been simplified so
that both new and existing companies have one main constitutional document, that
being articles of association. A deeming provision will transfer an existing company's
memorandum of association into its articles (see s.28 Companies Act 2006).
Intermsofs.31CompaniesAct2006,unlessacompany'sarticlesspeciicallyrestrict
the objects of the company, its objects are unrestricted. Where a company deals with
a person in good faith, the power of the directors to bind the company, or to give
permission to others to do so, is currently deemed to be free of any limitation under
thecompany'smemorandumandarticlesofassociation,sees.40CompaniesAct2006.
A person is not to be regarded as acting in bad faith by reason only of their knowing
that an act is beyond the powers of directors under the memorandum and articles of
association of the company. In addition, a person is presumed to have acted in good
faith unless the contrary is proved, see s.40(2) Companies Act 2006. Further, a party
to a transaction with a company is not bound to enquire as to whether the transaction
is permitted by the company's memorandum or as to any limitation on the powers of
the board of directors to bind the company or to sanction others to do so, see s.40(2)
Companies Act 2006.
3.3.5 Limited liability partnerships
Limited liability partnerships (LLPs) were created by the Limited Liability Part-
nership Act 2000 and are designed to offer the structural flexibility and tax status
of partnerships combined with limited liability for its members. An LLP is a body
