In re Wragg Ltd
Encyclopedia
In re Wragg Ltd [1897] 1 Ch 796 is a UK company law case, also relevant for English contract law
, concerning share
s, and the rule that shares should be exchanged for consideration that is in some sense at least sufficient, not necessarily adequate.
of Wragg Ltd claimed that the company was (in return for the share issue) was worth £18,000 less than the board had decided to pay.
decided shares cannot be issued at a discount, or below their nominal value, and continued.
Smith LJ concurred, saying if the consideration is ‘not clearly colourable nor illusory, then, in my judgment, the adequacy of the consideration cannot be impeached by a liquidator unless the contract can also be impeached’.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
, concerning share
Share
Share may refer to:to some dume life* To share a resource is to make joint use of it; see sharing.* Share , a man who writes Urdu poetry* Share , a stock or other security such as a mutual fund...
s, and the rule that shares should be exchanged for consideration that is in some sense at least sufficient, not necessarily adequate.
Facts
Mr Wragg and Mr Martin sold their omnibus and livery stable business to a newly incorporated company for £46,300. The company paid by issuing debentures and fully paid shares to Mr Wragg and Mr Martin. The liquidatorLiquidator
Liquidator may refer to:* Person assigned to oversee sale of assets:** Liquidator , for a company** Estate liquidator, for an estate or contents of a home* Liquidator , disaster-remediation worker...
of Wragg Ltd claimed that the company was (in return for the share issue) was worth £18,000 less than the board had decided to pay.
Judgment
Lindley LJ held that the transaction was wholly legitimate. He noted that Ooregum Gold Mining Co of India v RoperOoregum Gold Mining Co of India v Roper
Ooregum Gold Mining Co of India v Roper [1892] AC 125 is an old and controversial UK company law case concerning shares. It concerns the rule that shares should not be issued "at a discount" on the price at which they were issued....
decided shares cannot be issued at a discount, or below their nominal value, and continued.
Smith LJ concurred, saying if the consideration is ‘not clearly colourable nor illusory, then, in my judgment, the adequacy of the consideration cannot be impeached by a liquidator unless the contract can also be impeached’.
See also
- UK company law
- Chappell & Co Ltd v Nestle Co LtdChappell & Co Ltd v Nestle Co LtdChappell & Co Ltd v Nestle Co Ltd [1960] AC 87 is an important English contract law case, where the House of Lords confirmed the traditional doctrine that consideration must be sufficient but need not be adequate.-Facts:...
[1960] AC 87