It has been suggested that Turquand Rule be merged into this article or section. (Discuss)

Royal British Bank v Turquand (1856) 6 E&B 327, and the eponymous "Rule in Turquand's Case" refer to the rule of English law that a third party dealing with a company is entitled to presume that a person held out by the company has the necessary authority to act on behalf of the company. Image File history File links Please see the file description page for further information. ... English law is a formal term of art that describes the law for the time being in force in England and Wales. ... Look up company in Wiktionary, the free dictionary. ...

The common law rule mitigated the perceived harshness of the doctrine of constructive notice with respect to the "public documents" of a company (including its Memorandum of Association and Articles of Association). This article concerns the common-law legal system, as contrasted with the civil law legal system; for other meanings of the term, within the field of law, see common law (disambiguation). ... Constructive notice is a legal fiction used in the law of both common law and civil law systems to signify that a person or entity is legally presumed to have knowledge of something, even if they have no actual knowledge of it. ... A Memorandum of Association is one of the documents required in the United Kingdom to incorporate a company, also seen in many jurisdictions of the British Commonwealth. ... Articles of Association are a requirement for the establishment of a company under United Kingdom and in most other countries company law. ...

In Turquand the articles provided that the company could borrow on bonds such sums as from time to time authorised by a resolution passed in general meeting. The court held that a third party bondholder "finding that the authority might be made complete by a resolution ... would have a right to infer the fact of a resolution authorising that which on the face of the document appeared to be legitimately done." In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon) at a later date, termed maturity. ... A General meeting is a meeting of an organisation which the generality of its members are entitled or encouraged to attend. ...

In fact, the rule was not accepted as being firmly entrenched in law until it was endorsed by the House of Lords in Mahoney v East Holyford Mining Co. (1875) LR 7 HL 869. The House of Lords, in addition to having a legislative function, has a judicial function as a court of last resort within the United Kingdom. ...

In Mahoney Lord Hatherly phrased the law thus:

"When there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company.

So, in Mahoney, where the company's articles provided that cheques should be signed by any two of the three named directors and by the secretary, the fact that the directors who had signed the cheques had never been properly appointed was held to be a matter of internal management, and the third parties who received those cheques were entitled to presume that the directors had been properly appointed, and cash the cheques. Typical cancelled personal cheque as used in the U.S. A cheque, or (in American English) check, thought to have developed from Persian Ú†Ùƒ chek, is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specific demand account held in the maker... In relation to a company, a director is an officer of the company charged with the conduct and management of the affairs of the company. ...

The position in English law is now superseded by section 35A of the Companies Act 1986, but the Rule in Turquand's Case is still applied throughout many common law jurisdictions in the Commonwealth. The English noun Commonwealth dates originally from the fifteenth century. ...