EAA Publications
|
| |
| The Freshman |
Content
Page |
| |
| Full authorization needed
when documents are executed by a limited company |
| |
Mrs Chu had a terrible first
experience with buying a flat and vowed that she would exercise
great care when dealing with a limited company again. Three
months before, on the introduction of an estate agent, Mrs Chu
inspected a flat. The price was more than 10% lower than that
of other flats in the same district, and she liked the flat
very much. So she wanted to sign a provisional agreement for
sale and purchase with the owner immediately. In the afternoon,
the owner showed up and handed Mrs Chu his name card. His title
was Manager, ABC Co Ltd. He said that the property belonged
to the company and he had only come to sign the agreement on
behalf of the company. The man further said that as he was in
a hurry he had not brought with him the relevant papers. He
promised to supply them later. Because the papers were not ready,
he would not take too much deposit from Mrs Chu but only $5,000
in cash as a token of Mrs Chu's intention. Unaware of any fraud,
Mrs Chu signed an agreement with him and gave him $5,000 in
cash.
Quite some time later, the solicitor acting for Mrs Chu informed
her that he had not been able to contact the solicitor acting
for the owner. Mrs Chu then called ABC Co Ltd and asked for
the manager, only to learn that the man had left his job the
previous month. The flat used to be staff quarters occupied
by the man when he was employed by the company. Mrs Chu at once
realized that she had been taken in and lost $5,000. Of course,
the manager was nowhere to be found.
In the above incident, if Mrs Chu had not been rushed into signing
the agreement but had demanded such proof of authorization as
the seal of the company, the power of attorney issued by the
company, and board resolutions approving the sale of the flat
and the authorization of representative, she would not have
sustained such losses. At the very least, the deposit should
have been made by cheque drawn in favour of the limited company.
Another point to be noted is that once a limited company goes
into liquidation, it is in no position to perform a contract
or to make any compensation. As a limited company is a separate
legal entity, its directors may not have to bear personal liabilities.
At the same time, it is advisable for an estate agent to be
especially careful in handling transactions involving a limited
company and to give the purchaser appropriate advice.
|
| |
