- When MOA and AOA registered it became public document.
- It can be inspected by anyone upon payment of nominal fees.
- So it is pre assumed that every person who enter into a contract with company has already know the exect power of company.
- In other words, every person dealing with company deemed to be have 'constructive notice' of the contents of MOA and AOA of company.
- In fact it is deemed that they not only read that document but they understood them in their proper meaning.
- As per this doctrine if a person enter into a contract which is beyond the power of a company or beyond the limit set by AOA than person not have any right under contact against company.
- Case Law - Jhones V/s Smith.
- Example - If article provide that "Bill of Exchange" required signature of two director then person dealing with co. need to check it is signed or not, if he don't check it than co. is not liable.
- Exception of doctrine of constructive notice - Doctrine of Indoor management.
Doctrine OF Indoor Management
- Doctrine of constructive notice protect the company against outsiders, while Doctrine Of Indoor Management protect outsiders against company.
- Case law - Royal British Bank V/s Turquand
( In this case court held that outsiders are bound to know the external position of company not bound to know it's indoor management.)
- Exception of Doctrine Of Indoor Management -
(i) Where outsiders has knowledge of irregularity.
(ii) No knowledge of MOA and AOA.
(iii) In case of Forgery.
(iv) In case of Negligence.