Home >> Dictionary Of Banking >> Companies to Guarantee Guaranty >> Contracts

Contracts

contract, company, behalf and writing

CONTRACTS. A contract is a formal agreement between two parties, it being understood by both that if the contract is broken it may become the subject of an action at law.

A contract may be made in a document under seal, as in a conveyance of property or transfer of shares ; or it may be a simple contract made either by word of mouth or by a writing not under seal, as in a bill of exchange. In a simple contract there must be a consideration of value.

A contract with a minor, with respect to any loan to him, is void. A contract is also void if it is forbidden by an Act of Parlia ment ; for example, when shares of a bank are sold, the contract note must specify the numbers of the shares, and if it does not do so, the contract is, legally, void. (See LEEMAN'S ACT.) A contract under seal is a specialty con tract, and an action must be brought within twenty years from the date when the cause of action first arose. In the case of recovery of land the period is twelve years. In a simple contract, the action must be brought within six years.

Section 76 of the Companies (Consolida dation) Act, 1908, enacts that : " (1) Contracts on behalf of a company may be made as follows (that is to say) : (i) Any contract which if made between private persons would be by law required to be in writing, and if made according to English law to be under seal, may be made on behalf of the company in writing under the common seal of the company, and may in the same manner be varied or discharged : (ii) Any contract which if made between private persons would be by law required to be in writing, signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied, and may in the same manner be varied or discharged : " (iii) Any contract which if made between private persons would by law be valid al though made by parol only, and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or im plied, and may in the same manner be varied or dis charged.

(2) All contracts made according to this Section shall be effectual in law, and shall bind the company and its successors and all other parties thereto, their heirs, executors, or administrators as the case may be.

" (3) Any deed to which a company is a party shall be held to be validly executed in Scotland on behalf of the company if it is executed in terms of the provisions of this Act or is sealed with the common seal of the company and subscribed on behalf of the company by two of the directors and the secretary of the company, and such subscription on behalf of the company shall be equally binding whether attested by witnesses or not." As to stamp duty see AGREEMENT. (See '