Volume 24, Issue 3 (2020)                   CLR 2020, 24(3): 37-64 | Back to browse issues page

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jorfi A, Issaei Tafreshi M, Shahbazinia M. liability of board of directors of the company in relation to its negotiable instrument according to the principles of the relationship between directors and the company in the English and Iranian law. CLR 2020; 24 (3) :37-64
URL: http://clr.modares.ac.ir/article-20-24673-en.html
1- Master of student in private law, faculty of law, University of Tarbiat Modares, Tehran, Iran
2- Full Professor of private law, faculty of law, University of Tarbiat Modares, Tehran, Iran , Tafreshi@modares.ac.ir
3- Associate Professor of private law, faculty of law, University of Tarbiat Modares, Tehran, Iran
Abstract:   (2098 Views)
As companies are abstract, the negotiable instruments of the company are signed by real persons.The extent of authority and liability of directors in signing such documents, not only theoretically but also practically, will have significant effects on the business relationships of the company and the third parties. English law considers the directors of the company as the organs of the company and gives them wide authority.If the director signs negotiable instruments beyond his authority or even outside the company’s frameworks and responsibilities, it is presumed that the company itself has signed it. However, this does not prevent the company from penalizing the director. Iranian law, in relation to the limits of the director's liability, differentiates the company limited by shares from other companies. Due to the wide range of authority that the directors in ‘the company limited by shares’ possess, generally the signing of the negotiable instruments by them leads to the liability of the company limited by shares. In other companies, the authority of the directors is limited to the authority delegated by the company.If the directors sign the negotiable instruments beyond their authority, the company will not be liable for the negotiable instruments and the third party should be directly addressed to the directors, for compensation. In the case of cheque, due to certain provisions in Article 19 of the Law of drawing cheque, if the director board of the company is issued within the limits of the authority, he has joint and several liability with the company.
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Article Type: Original Research | Subject: Comparative Law
Received: 2018/09/2 | Accepted: 2019/03/2 | Published: 2021/02/19

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