Law · Corporate Law
ABC Ltd has Articles of Association which include a clause stating that 'Mr. X shall be the company solicitor for life and shall be entitled to an annual retainer of $5,000.' Mr. X is also a shareholder of ABC Ltd. The company recently terminated its relationship with Mr. X and stopped paying the retainer. Mr. X wishes to sue the company for breach of the statutory contract formed by the Articles. Which of the following best describes the legal position of Mr. X?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Mr. X can sue only if he can prove that the removal was not bona fide in the interest of the company as a whole.
- 2Mr. X can sue because as a shareholder, he is entitled to enforce any provision contained within the company's constitution.
- 3Mr. X cannot sue under the Articles because he is seeking to enforce a right in a capacity other than that of a member.✓
- 4Mr. X can successfully sue for breach of contract because the Articles are a contract between the company and its members in all respects.
Correct answer
Mr. X cannot sue under the Articles because he is seeking to enforce a right in a capacity other than that of a member.
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