The concept of limited liability is, of course, almost always rather illusory for smaller companies in particular. Invariably a bank will require personal guarantees from the directors as well as a charge over the company’s own assets. Directors and others should remember that lenders ask for guarantees for a reason, and that if a guarantee is given it should be assumed that payment will have to be made.
There’s a cautionary reminder for committee members of clubs and other incorporated associations in the recent Court decision in Davies v Barnes Webster & Sons Limited.
Mr Davies was the president and a member of the management committee of a club. The club wanted some building work done, and entered into a contract with Barnes Webster for that work. The contract was signed by the club’s treasurer on the committee’s authority. In due course, the club failed to pay the money due under the contract. Read more