Company Law

Company Constitution Cases

Rayfield v Hands [1960] Ch 1

Key Point

• Affirms the maxim ut res magis valeat quam pereat (it is better for a thing to have effect than to be made void) in relation to the principle of interpretation, which applies to company articles
• The articles of a company impose obligations inter se the shareholders.

Facts

• R sued the directors of Field Davis Ltd to buy his shares.
• Article 11 of the company constitution said ‘Every member who intends to transfer shares shall inform the directors who will take the said shares equally between them at a fair value.'
• The directors refused to follow this rule, arguing that the term “will” imported the idea of option or choice
• R sought an injunction.