Companies Act 2006 – When can you be personally liable?

There are big changes coming for Companies and their Directors from the beginning of October 2008.

Come to our short talk and pick up our handbook so you know the simple practical steps you can take to comply with your legal duties and avoid personal liability.

There are 8 places left on the first talk at our office at 4.30pm on Tuesday 19th August 2008.

We will be giving further short talks at our offices during September so if you cannot manage the 19th August register your interest with us anyway.

Please telephone Michael Kemp on 01604 673303 or e-mail michael@catosolicitors.com to reserve your place.

CONTEX DROUZHBA LIMITED V WISEMAN

A contract was entered into for the supply of goods on credit which was signed by a Director.

In signing the Court held that the Director implicitly represented the company was able to pay for the goods that it ordered.

At the time of signing the Director knew that the company was insolvent and there was no possibility it could pay up.

The Court of Appeal held the Director personally liable for the deceit and the judgement for him to pay £172,964.28 was upheld.

The Court said:-

Even if a company would be liable for the deceit carried out by its Director, the Director has a personally liability for his own fraud.

However, it is necessary for the representation to be in writing.

The moral of this story is it is safer to be fully aware of your company’s solvency when you are signing Orders for goods and services.