Before the above provisions could apply, there must be evidence of ratification by the new company of contracts made before its formation. In the case on hand, there was no such evidence. Nor was it shown who, if any body had ratified the contract between the plaintiff/appellant and the 1st defendant.
— Oguntade, JSC. Garuba v. Kwara Investment (2005) – SC.260/2000
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In Kelner v. Baxter (1866) L. R. 2 C.P. 174 Erie C.J. explaining the rationale of the principle [pre-incorporation contract] said: “as there was no company in existence at the time, the agreement would be wholly inoperative unless it were held to be binding on the defendant personally…where a contract is signed by one who professes to be signing as agent, but who has no principal existing at the time, and the contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby; and a stranger cannot by a subsequent ratification relieve him from the responsibility”.
The Receivership in the instant case which does not necessarily result in the liquidation or winding up of the company, the right to deal with the assets in the receivership are revived at the termination of the receivership. In all cases the right of the directors of the Company to deal with the assets of the company not in receivership or other matters not suspended are not affected by the appointment of a Receiver/Manager over the assets of the Company. The directors of the company do not by virtue of a receivership become functus afficio for all purposes of the company.
– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)
It is not necessary that it is only that person who carried out the function on behalf of the company that must testify. Not at all, as any official of the company well equipped with the transaction and or related documents would suffice to testify. – Peter-Odili JSC. Chemiron v. Stabilini (2018)
In Littlewoods Stores Ltd v. I.B.C. (1969)1 W.L.R. 1241 Lord Denning M.R. said: “The doctrine laid down in Salomon’s case has to be watched very carefully. It has been supposed to cast a veil over the personality of a limited liability company through which the Court cannot see. But that is not true. The Court can and often do draw aside the veil. They can and often do pull the mask. They look to see what really lies behind. The legislature has shown the way in group accounts and the rest. And the Court would follow suit.”
The English case of Jones v. Lipman (1962)1 WLR 832 exemplifies the situations in which the corporate veil will be lifted when a company is used as a mere facade concealing the true facts, which essentially means it is formed to avoid pre-existing legal obligations.
In Progress Bank of Nigeria Plc. V.O.K. Contact Point Holdings Limited (CA 3) (2008) 1 NWLR (Pt. 1069) 514, the Respondent obtained judgment against the appellant (a wound-up bank). The Appellant sought to appeal the decision but the Respondent filed an objection to the capacity of the Appellant to file a Notice of Appeal on the ground that, it was dead and that only its liquidator could file such appeal on its behalf. The Court of Appeal held thus:- “l must say straight away that, there is a world of difference between the winding-up of a company and the dissolution of a company. Under the provisions of Section 454 (1) and (2) of the Companies and Allied Matters Act, 1990, a company dies once the Court orders the dissolution of the company. The revocation of the company/bank and order of Court winding – up same does not indicate its death. The appointment of a liquidator is for the purpose of ensuring the smooth burial of the company. See Nzom v. Jinadu (1987) 1 NWLR (Pt. 51) 553; CCB (Nig.) Ltd V. Onwuchekwa (2000) 3 NWLR (Pt. 647) 65. There is nothing before us to show that Progress Bank of Nigeria Plc has been dissolved. It is so clear that the said bank is under a winding-up proceedings. In such a state, the bank is seriously ill, but not dead. That is the support of Section 417 of the Companies and Allied Matters Act, 1990. My Lords, a company/bank is certified dead on its dissolution, but where the bank as in this case is under winding up proceeding it has not died. It is gravely ill, it can sue and maintain an action in Court, but no action or proceeding can be brought against it except with the leave of the Court. In CCB (Nig) Ltd v. Onwuchekwa (2000) 3 NWLR (Pt. 647) page 65 at 75 the Court of Appeal said: “A company under winding up proceedings has not died. It is still alive but perhaps sick.”
Jenkins, L.J. in Edwards Vs Halliwell (1950) 2 ALL ER 1084 @ 1066, where His Lordship held inter alia: “The rule in Foss Vs Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and or all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that if a mere majority of the company or association is in favour of what has been done, then cadit quaestio. Thus, the company or association is the proper plaintiff in all actions in respect of injuries done to it. No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company, or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the company.”
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