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  • Business Law 2.00

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    In Foss v Harbottle (1842), the Court held that a breach of duty by company directors was a wrong done to the company, not individual shareholders, so the company alone could sue. In Macaura v Northern Assurance Co (1925), the House of Lords ruled insurers were not liable under a policy held by Mr. Macaura for timber that burned, since the timber belonged to the company, not Mr. Macaura individually. Both cases established that wrongs against a company can only be sued on by the company itself, not individual shareholders or others.

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    In Foss v Harbottle (1842), the Court held that a breach of duty by company directors was a wrong done to the company, not individual shareholders, so the company alone could sue. In Macaura v Northern Assurance Co (1925), the House of Lords ruled insurers were not liable under a policy held by Mr. Macaura for timber that burned, since the timber belonged to the company, not Mr. Macaura individually. Both cases established that wrongs against a company can only be sued on by the company itself, not individual shareholders or others.

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    11 views1 page

    Business Law 2.00

    Uploaded by

    yh
    In Foss v Harbottle (1842), the Court held that a breach of duty by company directors was a wrong done to the company, not individual shareholders, so the company alone could sue. In Macaura v Northern Assurance Co (1925), the House of Lords ruled insurers were not liable under a policy held by Mr. Macaura for timber that burned, since the timber belonged to the company, not Mr. Macaura individually. Both cases established that wrongs against a company can only be sued on by the company itself, not individual shareholders or others.

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    © All Rights Reserved
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    In Foss v Harbottle (1842), the Court rejected the two shareholders' claim and held that a

    breach of duty by the directors of the company was a wrong done to the company for which it
    alone could sue. In other words, the proper plaintiff in that case was the company and not the
    two individual shareholders. This rule is derived from two general legal principles of
    company law.[ CITATION HAM12 \l 2052 ]

    In the case of Macaura v Northern Assurance Co [1925] AC 619, the House of Lords held
    insurers were not liable on the contract, since the timber that perished in the fire did not
    belong to Mr Macaura, who held the insurance policy. Lord Buckmaster gave the first
    judgment, holding in favour of the insurance companies. Lord Atkinson concurred. Lord
    Sumner concurred.[ CITATION Rev18 \l 17417 ]

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