company contract execution

The Corporations Act provides that a person is entitled to assume that a document has been properly executed by a company if it has been signed by the appropriate company officers (eg, 2 directors, director and secretary or sole director).

The Facts

The ANZ Bank provided facilities to a group of companies including Frenmast Pty Ltd.  As a part of this the ANZ obtained a guarantee from Frenmast in relation to the loans it had made to one of the other companies and to one of the directors of Frenmast, Robert Tiricovski.

The guarantee appeared to have been executed by Frenmast because it bore the signatures of Robert Tiricovski and the company secretary Vlado Tiricovski.

However it eventuated that the signature of Vlado Tiricovski had been forged.

The Claim

The ANZ argued that it was entitled to rely upon the guarantee because:

  • it appeared to have been signed by the director and secretary and
  • section 128(3) of the Corporations Act states that in relation to dealings with a company a person is entitled to rely upon this assumption even if a company officer has acted fraudulently or forges a document.

The Legal Issue

The legal argument concentrated on the question of whether there had been “dealings” between the ANZ and Frenmast and whether the “dealings” had to be with someone with ostensible or actual authority to bind the company.

The Decision

The trial judge held that the evidence was not enough to establish “dealings” between ANZ and Frenmast.  However, the Court of Appeal had a different opinion holding that:

  • ANZ did have dealings with Frenmast – letters of offer to vary existing facilities containing acknowledgements and a form of guarantee to be signed by Frenmast;
  • Robert Tiricovski did have actual or ostensible authority to engage in the communications on behalf of Frenmast and Frenmast had allowed him to negotiate with ANZ over years;
  • ANZ was entitled to rely upon the statutory assumptions that Robert Tiricovski as director of Frenmast was properly performing his duties.

Read the full decision of the NSW Court of Appeal here.

Our Comments

This decision could be seen as comfort for those persons dealing with company officers.  However, it is unclear what sort of business history will constitute “dealings”.  In this case it is notable that the ANZ Bank had been dealing with Robert Tiricovski acting on behalf of Frenmast for over 10 years.

For further information on this update or any company or commercial advice, please contact Oldfield Legal.


The content of this article is intended to provide a general guide to the subject matter.  Specialist legal advice and business advice should be sought about your specific circumstances. For specific Legal Advice please contact us.


photo credit: Wiertz Sébastien via photopin cc


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