Appoint-
ment under
the Articles.

Cd

SECRETARIAL PRACTICE
Cairns, in the Court of Appeal, stated the effect of the
article as being that, the articles being an agreement infer
socios, it amounted to an agreement between the parties
to it to employ the plaintiff. This being an agreement
to which the plaintiff was in no way a party, he had no
right of action upon it. ‘This article,” he says, ‘is either
a stipulation which is binding on the members or else a
mandate to the directors; in either case it is a matter between
the directors and shareholders and not them and plaintiff.’
Lord Cairns meant, apparently, that the contract was be-
tween the company and each individual member, and also
between each individual member and each of his fellow
members; but, in view of Lord Herschell's words in Welton v.
Saffrey (quoted above), it appears that the latter of these
two elements must strictly be excluded. The principle
of the decision is not, however, affected by the exclusion.

The hardship of this decision is more apparent than real.
If a man is appointed by the articles, secretary or solicitor of a
company, there is, it is true, no binding contract by the com-
pany or the members to employ him as such. The prudent
and the usual course is for a contract to be entered into
between the company and the individual -it is desired to
employ, wholly apart from the articles, and then his position
is clear. Even if no contract has in fact been entered into,
and a person appointed by the articles has in fact been
employed as, say, secretary, the view taken by the Courts
is that, although the articles do not constitute a contract,
it can be ascertained from them upon what terms he is
serving. Or, to put the matter in another way, if the com-
pany and the secretary act as contemplated by the clause, the
Courts will treat them as though they had entered into a
contract in terms of the clause. There have been many
cases in which this principle has been acted on, and in some
of them the individual was a director. [See e.g. ex parle
Beckwith (1898), 1 Ch. 324).

Articles of association are public documents, and a person
dealing with a company will be deemed to know and under-
stand the contents of the articles [Griffith v. Paget (1877),
6 Ch. D. 511]; but he is not bound to do more than make
sure that the proposed dealing is not inconsistent with the
company’s regulations. ‘If the directors have power and
authority to bind the company but certain preliminaries are
required to be gone through on the part of the company
before that power can be duly exercised, then the person
contracting with the directors is not bound to see that all
these preliminaries have been observed. He is entitled to