The development of the Turquand rule and the doctrine of constructive notice in South African company law

Abstract

The dissertation analyses the development of the Doctrine of Constructive Notice and the Turquand rule in the South African Legal framework. The Doctrine of Constructive Notice in terms of the common law was that a person dealing with a company was deemed to be aware of the contents of a company’s constitution and all other public documents that were lodged with the registrar of companies and were open for public inspection, whether such a person indeed read these documents or not. In response to the severe effects brought about by this Doctrine, the Turquand Rule was historically formulated to alleviate these severe effects. The Rule essentially protects bona fide third parties who are not aware of any internal irregularities of the company that may effect the validity of the contracts entered into with the company.

The continued relevance of these company law doctrines are discussed by analysing the different views of academics and the application thereof by South African courts. A further emphasis is placed on the rules relating to authority as same finds application incorporate contracting. Corporate contracting is discussed and the relevance and application of the Turquand Rule on corporate contracting. When reference is made to corporate contracting, it analysis the relationship of a company with a third party when these parties enters into a contracting relationship with one another. Lastly, a brief comparative analyses is done pertaining to the laws of the United Kingdom and how these doctrines have developed in that jurisdiction compared to South Africa and the practical application and continued relevance of these doctrines in that jurisdiction.