- This is a case of abuse of power by directors i.e. excesses of directors.
- In this case, directors borrowed for a purpose other than that for which it was intended.
- This borrowing is intra rives, the company and is enforceable, since the bank was unaware of the misuse of the power to borrow.
- My advise to the Maendeleo Bank is that it can successfully recover the amount borrowed as it is not party to the abuse of power. My advise is based on the decision in re: David Payne & Co. where a company with a general power to borrow, borrowed from the plaintiff bank, but used the amount for an ultra rives purpose. The lending party was unaware of the abuse of power and it was held that the borrowing was enforceable.
marto answered the question on February 6, 2019 at 05:35
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