The correct answer is: B. Turquand rule
The Turquand rule, also known as the doctrine of indoor management, is a common law rule that protects third parties who deal with a company in good faith, even if the company has not authorized the transaction. The rule is based on the idea that third parties should be able to rely on the representations of a company’s agents, even if those representations are not authorized by the company’s board of directors.
The Turquand rule applies to a wide range of transactions, including contracts, guarantees, and assignments. To be protected by the rule, the third party must have acted in good faith and without knowledge that the company had not authorized the transaction. The third party must also have relied on the company’s representations, and the company’s representations must have been made by an authorized agent.
The Turquand rule is a valuable tool for third parties who deal with companies. It allows third parties to rely on the representations of a company’s agents, even if those representations are not authorized by the company’s board of directors. This can help to protect third parties from losses that they may incur if the company does not fulfill its obligations.
The Turquand rule is not without its critics. Some argue that the rule is too broad and that it allows third parties to take advantage of companies. Others argue that the rule is too narrow and that it does not protect third parties in all cases. Despite these criticisms, the Turquand rule remains an important part of the common law.
The other options are incorrect because:
- Option A, “Golden legacy,” is a term used to describe the principle that a company’s assets are not the personal property of its shareholders, but rather belong to the company itself.
- Option C, “Ejusdem generis rule,” is a rule of statutory interpretation that states that a general term should be interpreted in light of the specific terms that follow it.
- Option D, “None of these,” is the incorrect answer.