Adrian,the managing director of Landforce Pty Ltd organises a loan of $ XXXXXXXXXXfromWhichbank Ltd on behalf of the company. Adrian is a long-standing officer ofthe company and has dealt many...

The factual position, relevant to the impugned problem, can be summarised as below: -
 Adrian, the Managing Director, is an officer of the company who has dealt with the
Whichbank Ltd on a regular basis.
 There exists a stipulation in the company’s constitution that not more than $100 000
can be given for borrowing without the permission of the board of directors.
 Adrian has violated this particular rule laid down in the constitution.
 During the negotiations, Adrian assures to the bank that the new arrangement is
sanctioned by the company.
To analyse as to whether the bank can recover its money from the company, subsequent to
disappearance of Adrian with the money, we have to look at the relevant statutory provisions
contained in the Corporations Act, 2001.
Section 126 of the Corporations Act, 2001 reads as below: -
Quote
“(1) A company's power to make, vary, ratify or discharge a contract may be exercised by
an individual acting with the company's express or implied authority and on behalf
of the company. The power may be exercised without using a common seal.
(2) This section does not affect the operation of a law that requires a particular procedure to
be complied with in relation to the contract”. (Emphasis supplied)
Unquote
Hence, we can deduct that an individual has the right to get into a contract with the company
with the implied authority. Adrian had the power to enter into contract with the bank with its
authority though the constitution of the company imposed restrictions on the same. Adrian,
knowingly, had exceeded his authority and arranged a loan of a higher amount without
obtaining approval of the Board. (Austin, 1986) Whether the bank acted contrary to accepted
legal position? Was it entitled to assume the correctness of the whole transaction?
Section 128 ibid (reproduced below) deals with the assumption that may be made by the
person(s) dealing with a company: -
Quote
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#company
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#company
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#on_behalf_of
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#on_behalf_of
http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#company
(1) A person is entitled to make the assumptions in section 129 in relation to dealings with
a company. The company is not entitled to assert in proceedings in relation to
the dealings that any of the assumptions are incorrect.
(2) A person is entitled to make the assumptions in section 129 in relation to dealings with
another person who has, or purports to have, directly or indirectly acquired title
to property from a company. The company and the other person are not entitled to assert in
proceedings in relation to the dealings that any of the assumptions are incorrect.
(3) The assumptions may be made even if an officer or agent of the company acts
fraudulently, or forges a document, in connection with the dealings.
(4) A person is not entitled to make an assumption in section 129 if at the time of
the dealings they knew or suspected that the...