To what extent does the doctrine of constructive notice operate negatively?
ANSWER
This doctrine is to the effect that persons who deal with the company are deemed to know the contents of its public documents, namely memorandum, articles special resolutions etc.
• They are deemed to know the company’s contractual capacity i.e. whether a transaction is intra or ultra vires the company.
• This is because these documents are registrable with the registrar and are open for inspection any person who cares to inspect them.
• This doctrine protects the company from persons who do not inquire.
• It is a modification to the doctrine of indoor management. i.e. rule in Turquands Case
• This doctrine operates negatively in that although parties are deemed to know the contents of the public documents, a party can only rely on those contents if it has actual knowledge of their existence in the documents. It was so held in Rama Corporation v Proved Tins and General Investments where it was held that the plaintiff could not rely on the article permitting delegation since it had no notice of its existence. The company could not be held liable on the contract.