Overview

Capacity

Section 124 Legal capacity and powers of a company

Section 124 gives a company the same legal capacity as ‘an individual’ including the power to make an agreement and s 125 effectively provides that the performance of an act – including entry into an agreement – by a company will not be invalid merely because it is beyond the power of the company’s constitution.

Section 126 Agent exercising a company's power to make contracts

A company may make a contract through an agent acting on its behalf. Section 126 empowers a person acting on behalf of the company with its express or implied authority to ‘make, vary, ratify or discharge a contract.’

Section 131 Contracts before registration

A contract made by a promoter of a company on behalf of the company but before it has been formed is enforceable pursuant to s 131(1) of the Corporations Act 2001 provided that the company, once formed, ratifies that pre-registration contract within an agreed time or, if no time is set, a reasonable time.  If the company does not form or ratify the contract the individual responsible for making the contract on its behalf may also be liable (s 131(2)).

Extracts will follow