Rayfield v Hands [1960] Ch 1

Court: High Court

Facts: Rayfield (R) sought to compel the directors of Field Davis Ltd to purchase his shares as per Article 11 of the company's constitution, which mandated that directors must purchase shares intended for transfer at a fair value. The directors argued that "will" in the article implied an option rather than an obligation.

Issue: Did the term "will" in Article 11 impose a mandatory obligation on the directors to buy the shares?

Held: Injunction granted. The court found that the term "will" indicated a contractual obligation rather than a discretionary choice, obliging the directors to purchase the shares.

Key Judicial Statement: Vaisey J observed, "The word ‘will’ does not indicate volition... In the interpretation of such a commercial document as articles of association, the maxim ut res magis valeat quam pereat should certainly be applied."

💡 Leveluplaw: In interpreting company articles, terms are mandatory if clearly intended, and the principle that it is better for a provision to have effect than to be rendered void is applied.