Clause 52
Company Law Reform Bill [Lords]
6:15 pm
Margaret Hodge (Minister of State (Industry and the Regions), Department of Trade and Industry; Barking, Labour)
I bow to the hon. Gentleman’s greater knowledge and his long experience of teaching and researching in the area. My attention was also drawn to the case that he mentioned. One part of the judgment that he did not bring up was how liabilities and rights should be dealt with and whether their treatment should be enshrined in law or a matter for courts to decide. The judgment stated:
“Parliament intended to preserve the process of common law adjudication in this respect and to leave it to the courts to complete the exercise of defining the relevant circumstances.”
The matter that the hon. Gentleman wishes us to set out in the Bill is one that we have decided is best defined through common-law adjudication. The questions about liabilities and rights should be determined by the courts. The court made it clear that someone who is personally liable may be able to enforce the contract. I hope that that gives some comfort to the hon. Gentleman.
The amendment would define the circumstances in which an agent can enforce a contract, but the company law review examined the issue and did not recommend any change. I do not know whether the hon. Gentleman has a view on that, but what the courts have said and the process of the company law review mean that the clause covers the matter in the best way that it can. We should leave the courts to decide the rights and duties of all parties to contracts entered into before a company is formed.