This article will be taking a look at the contracts of a company under the Companies & Allied Matters Act CAMA, particularly in the aspects of form and the legal implications of contracts involving the common seal of a company as well as powers of attorney under CAMA 2020.
What are the permissible forms of contract under CAMA 2020?
The act provides that contracts on behalf of a company may be made, varied or discharged in the following forms :-
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– Any contract which if made between individuals would be by law required to be by deed, or which would be varied, or discharged only by deed may be made, varied or discharged, as the case may be, in writing as a deed in the name or on behalf of the company.
– Any contract which if made between individuals would be by law required to be in writing, signed by the parties to be charged therewith, or which could be varied or discharged only by writing or written evidence signed by the parties to be charged, may be made, varied or discharged, as the case may be, in writing signed in the name or on behalf of the company.
-Any contract which if made between individuals would be valid although made orally only and not reduced into writing or which could be varied or discharged orally, may be made, varied or discharged, as the case may be, orally on behalf of the company.
-A contract made according to the relevant section of CAMA governing company contracts shall be effectual in law, and shall bind the company and its successors and all other parties there to, their heirs, executors, or administrators, as the case may be; and may be varied or discharged in the same manner in which it is authorized by this section to be made.
What does the act say regarding pre-Incorporation contracts?
-The act provides that any contract or other transaction purporting to be entered into by the company or by any person on behalf of the company prior to its formation may be ratified by the company after its formation and thereupon the company shall become bound by and entitled to the benefit thereof as if it has been in existence at the date of such contract or other transaction and had been a party thereto.
-Prior to ratification by the company, the person who purported to act in the name or on behalf of the company shall, in the absence of express agreement to the contrary, be personally bound by the contract or other transaction and entitled to the benefit thereof.
What are the provisions of the act on bills of exchange & promissory notes?
The act provides that a bill of exchange or promissory note is deemed to have been made, accepted, or endorsed on behalf of a company if made, or expressed to be made, accepted, or endorsed in the name of the company, or if expressed to be made, accepted or endorsed on behalf or on account of the company by a person acting under its authority.
The company and its successors shall be bound thereby if the company is, in accordance with the relevant provisions sections of the act, liable for the acts of those who made, accepted or endorsed it in its name or on its behalf or account, and a signature by a director or the secretary on behalf of the company shall not be deemed to be a signature by procuration for the purposes of section 25 of the Bills of Exchange Act.
What are the provisions of CAMA 2020 on the Common Seal of a Company?
The act provides that a company may have a common seal but need not have one, and where a company has a common seal, the design and use of that seal shall be regulated by the company’s articles and it shall have its name engraved in legible characters on the seal.
What are the provisions of CAMA 2020 on official company seals for use abroad?
-The act provides that a company whose objects require or comprise the transaction of business in foreign countries may, if authorized by its articles, have for use in any territory, district, or place outside Nigeria, an official seal, the design and use which shall be regulated by the company’s articles, and shall indicate on its face the name of every territory, district, or place where it is to be used.
-A company having such an official seal may, by deed, authorize any person appointed for the purpose in any territory, district, or place outside Nigeria, to affix the same to any deed or other document to which the company is party in that territory, district, or place.
-The authority of any such agent shall, as between the company and any person dealing with the agent, continue during the period, if any, mentioned in the instrument conferring the authority, or if no period is there mentioned, then until notice of the revocation or determination of the agent’s authority has been given to the person dealing with him.
-The person affixing any such official seal shall, by writing under his hand, on the deed or other document to which the seal is affixed, certify the date on which and place at which it is affixed.
-In the case of companies that have a common seal, a deed or other document to which an official seal is duly affixed shall bind the company as if it has been sealed with the common seal of the company.
What does the act say about the execution of powers of attorney involving companies?
The act provides a company may, by deed, empower any person, either generally or in respect of any specified matter, as its attorney, to execute deeds on its behalf in any place within or outside Nigeria.
A deed signed by a person empowered as provided above shall bind the company and have the same effect as it would have if it were a deed signed by the company.