DCC 386/1997
Type
Case
Court
Dubai Court of Cassation
Jurisdiction
Dubai, United Arab Emirates
Taxonomy
General Contract Law, Companies & Corporate Bodies
Copyright
LexisNexis
Decision date
27 Jun 1998
Catchwords
Loan contracts – Commercial company – Liability for debts – Company law – Company liability
The case involved liability to repay a loan which had been taken out by a manager in the first defendant's business which was owned by the second defendant. The key point made was that a commercial company is liable for the acts of its manager but only in relation to powers vested by the company in that manager. Although the debt was in writing on the company letterhead a document was produced which showed the power to take out a loan had not been vested in the manager so the manager was personally liable.
Background
A claimant filed a case against the first and second defendants ordering them to repay 25,470 AED for a loan which had been taken out by the manager of the first defendant which was owned by the second defendant. The court of first instance ordered both defendants to pay the claimed amount, jointly and severally. The defendant appealed and the court rejected the claimant's claim. The claimant appealed by cassation arguing that the judgement had rejected the claim despite the fact the debt was in writing on the first defendant's letterhead, and had been signed by its manager.
Decision