Eley v Positive Government Security Life Assurance Co Ltd [1876]

Eley v Positive Government Security Life Assurance Co Ltd [1876] 1 Ex D 88 is a notable UK company law case that deals with the interpretation and enforceability of a provision in a company's articles of association.

The relevant provision in the company's articles, Article 118, stated that Mr William Eley would be the solicitor to the company. Eley had actually drafted the articles himself. However, the company never employed him as its solicitor. Despite not being appointed as the solicitor, Eley, who was also a member of the company, brought an action to enforce the articles in his capacity as a solicitor.

The Exchequer Division initially held that the articles did not create any contract between Eley and the company. In the Court of Appeal, Lord Cairns LC affirmed this decision, stating that Mr Eley had the right to sue only in his capacity as a member, not as a solicitor.

Lord Cairns expressed his opinion that a contract of the kind suggested in this case (a bargain between a professional person and the company) should not receive any particular favour from the court. He highlighted that the arrangement between Eley and the company, wherein Eley would advance money for the formation of the company in exchange for being appointed permanent solicitor, was not effectively communicated to those invited to join the company.

Lord Cairns also raised concerns about the nature of the contract, questioning whether a contract under which a solicitor is not bound to provide any particular services, but the company is obliged to employ him for all their business, would be one that the courts should enforce. He reserved judgment on the validity of such an agreement.

The judgment emphasised that Article 118, even if considered a covenant between the parties, was a matter between the directors and shareholders, not between them and Mr Eley. It was either a stipulation binding the members or a mandate to the directors. Lord Cairns concluded that there was no evidence of a specific contract between Eley and the company, and his mere reliance on Article 118 did not alter the legal effect of the articles.

In summary, the court held that the article in question did not create a binding contract between Eley and the company, and Eley's remedy, if any, would be as a member seeking remuneration for work done, not as a solicitor enforcing a contractual obligation.
Back to blog

UOL Case Bank

Upon joining, you become a valuable UOL student and gain instant access to over 2,100 essential case summaries. UOL Case Bank is constantly expanding. Speed up your revision with us now.

Subscribe Now

Where are our students from?

Council of Europe
Crown Prosecution Service
Baker Mckenzie 
Yale University
University of Chicago
Columbia University
New York University
University of Michigan 
INSEAD
University of London
University College London (UCL)
London School of Economics (LSE)
King’s College London (KCL)
Royal Holloway, University of London 
Birkbeck, University of London
SOAS, University of London
University of Manchester
University of Zurich
University of York
Brandeis University
University of Exeter
University of Sheffield
Boston University
University of Washington
University of Leeds
University of Law
University of Kent
University of Hull
Queen’s University Belfast
Toronto Metropolitan University
Hong Kong University of Science and Technology
University of Buckingham
ESSEC Business School

  • Criminal Practice

    Diagrams and Charts

    Our carefully designed diagrams and charts will guide you through complex legal issues.

  • Criminal Law

    Clear and Succinct Definitions

    Key concepts are concisely defined to help you understand legal topics quickly.

  • Property Law

    Statutory Provisions

    Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

  • Public Law

    Case Summaries

    We have summarised important cases for you so that you don't need to read long and boring cases.

  • Evidence

    Rules and Exceptions

    Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.

  • Company Law

    Terminology

    Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

  • Case Law

    Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

  • Law Exam Guide

    Law Essay Guide

    You will learn essential law exam skills and essay writing techniques that are not taught in class.

  • Law Exam Guide

    Problem Question Guide

    We will show you how to answer problem questions step by step to achieve first-class results.

  • Conflict of Laws

    Structured Explanations

    Complex legal concepts are broken down into concise and digestible bullet point explanations.

  • Legal System and Method

    Legal Research

    You will learn legal research techniques with our study guide and become a proficient legal researcher.

  • Jurisprudence and Legal Theory

    Exam-focused

    All essential concepts, principles, and case law are included so that you can answer exam questions quickly.