This website uses cookies to ensure you get the best experience on our website. Learn more

Item Software v Fassihi [2004] EWCA Civ 1244

By Oxbridge Law TeamUpdated 04/01/2024 07:05

Judgement for the case Item Software v Fassihi

Table Of Contents

  • Defendant was director of Claimant. Claimant was in a distribution agreement with Isograph.  When Claimant tried to renegotiate its terms with Isograph on more favourable terms, Defendant approached Isograph with idea of establishing new company to take over distribution agreement; however at same time, Defendant encouraged Claimant to take aggressive stance in negotiations.

  • Negotiations fell through, and Isograph entered new agreement with Defendant.

  • When Claimant heard this, alleged Defendant had not complied with duty to act bona fide in interests of company (pre-2006 law) by failing to disclose his misconduct to Claimant.

Held

  • Fiduciary duty to act bona fide in interests of company require Defendant to disclose his own or others’ misconduct to company.

  • Policy reasons support this extension of duty of loyalty:

    • Is economically efficient, as it means that company does not have to expend resources investigating directors’ conduct

    • Helps shareholders monitor activities of directors

    • Helps directors comply with their duty of oversight (e.g. Re Barings)

    • All directors’ duties are essentially extension of duty of directors not to benefit themselves at expense of corporation

      • Thus not unnatural to extend duty of loyalty in this way

Facts

  • Defendant had breached rule against diversion of corporate opportunity.

  • Thus on facts, is no way Defendant could have complied with his duty top act in best interests of company without telling Claimant of his plans to steal the contract from them.

Any comments or edits about this case? Get in touch

For Further Study on Item Software v Fassihi

Trusts and Equity Notes
1,016 total pages
1809 purchased

Equity notes fully updated for recent exams at Oxford and Cambridge. Th...

Company law Notes
805 total pages
1071 purchased

Company law notes fully updated for recent exams in the UK. These notes...

Need instant answers? Our AI exam tutor is here to help.

Ask questions 🙋 Get answers 📔 It's simple 👁️👄👁️

Our AI is educated by the highest scoring students across all subjects and schools. Join hundreds of your peers today.

Get Started
Claim every advantage to get a first in law
Company law Notes
805 total pages
1071 purchased

Company law notes fully updated for recent exams in the UK. These notes...