Eley v Positive Government Life Assurance (1876) 1 Ex D 88

Court: Court of Appeal

Facts: Mr. Eley was given the right to act as the company’s solicitor under the articles of association. When dismissed, he claimed enforcement of this right, despite not being a member at the time of the articles' creation.

Issue: Can Mr. Eley enforce rights under the articles of association if he was not a member at the time of their creation?

Held: Mr. Eley could not enforce the articles. The court found the articles created obligations between members and the company, not third-party rights.

Key Judicial Statement: Lord Cairns LC remarked, "The article is either a stipulation which would bind the members, or else a mandate to the directors. In either case it is a matter between the directors and shareholders, and not between them and the plaintiff."

💡 Leveluplaw: Articles of Association typically do not create enforceable third-party rights, as rights are confined to members and the company itself.