Thats another FRYne mess you've got them into...
Discussion
From Autosport:
Henkel says Mercedes deal is invalid
Monday, December 14th 2009, 15:26 GMT
German company Henkel says a sponsorship deal apparently agreed with the Mercedes GP team was put together by an ex-employee acting without authorisation, and that it will not be honouring the partnership.
Henkel has issued a statement arguing that it has no responsibility for the three-year contract, which it says was worth 90 million euros, and that it informed Mercedes in September that the deal was invalid.
Its statement argues that the Formula 1 team - which was still operating as Brawn GP at the time - should have been more thorough in checking the deal and the Henkel representative it was negotiating with. The case is the subject of a legal dispute.
A bit more info on Pitpass:
http://pitpass.com/fes_php/pitpass_news_item.php?f...
Henkel says Mercedes deal is invalid
Monday, December 14th 2009, 15:26 GMT
German company Henkel says a sponsorship deal apparently agreed with the Mercedes GP team was put together by an ex-employee acting without authorisation, and that it will not be honouring the partnership.
Henkel has issued a statement arguing that it has no responsibility for the three-year contract, which it says was worth 90 million euros, and that it informed Mercedes in September that the deal was invalid.
Its statement argues that the Formula 1 team - which was still operating as Brawn GP at the time - should have been more thorough in checking the deal and the Henkel representative it was negotiating with. The case is the subject of a legal dispute.
A bit more info on Pitpass:
http://pitpass.com/fes_php/pitpass_news_item.php?f...
It's a good job Fry is now talking up a Schumacher return... http://news.bbc.co.uk/sport1/hi/motorsport/formula...
The publicity should attract some new sponsors.
Steve
The publicity should attract some new sponsors.
Steve
joewilliams said:
I don't understand what the fraudster stood to gain. Was there a financial incentive, or did he just fancy pretending to be a big shot?
Often the deal is that the finder's fee is paid by the team (because the team and the finder are both reluctant to disclose to the sponsor how much the finder's getting). The crooks may well have had in mind a scam by which they would get paid by Brawn prior to the Henkel money's purported arrival.joewilliams said:
I don't understand what the fraudster stood to gain. Was there a financial incentive, or did he just fancy pretending to be a big shot?
I do hope that the contract was signed in the UK. If so then, under the latest Companies Act, Brawn are (IIRC) entitled to rely upon a reasonable belief that the person signing the contract is authorised so to do. So long as they've checked some basics they could, in theory, get the money! The German courts may be less inclined to accept this.I wonder if Mercedes' management, seeing the extent of their problem, called up Schumacher and said "hey, we're desperate here, can you drive for us for a year so that sponsors fall over themselves to come on board?"
skwdenyer said:
joewilliams said:
I don't understand what the fraudster stood to gain. Was there a financial incentive, or did he just fancy pretending to be a big shot?
I do hope that the contract was signed in the UK. If so then, under the latest Companies Act, Brawn are (IIRC) entitled to rely upon a reasonable belief that the person signing the contract is authorised so to do. So long as they've checked some basics they could, in theory, get the money! The German courts may be less inclined to accept this.I wonder if Mercedes' management, seeing the extent of their problem, called up Schumacher and said "hey, we're desperate here, can you drive for us for a year so that sponsors fall over themselves to come on board?"
Recently I was involved (as a witness) in a suit in which a senior officer of a British company had made a commitment (of a very much smaller magnitude, and entirely for the bona fide purpose of benefiting the company) to a junior employee, of which commitment other senior officers were aware beforehand, and even there the barristers' view was that the commitment was not binding upon the company.
That a middle manager-type, who was one of 55,000 company employees, could surreptitiously commit that company inextricably to an £80m fraudulent sponsorship, which had not the slightest substance within the company except that he used their e-mail address, seems like a very slender reed on which a plaintiff might rely.
Joe Saward Blog said:
.................. Brawn informed Mercedes boss Dieter Zetsche that there was a Henkel deal in place and he spoke directly to Henkel’s chief executive Kasper Rorsted, who said that the company had no interest in Formula 1 and denied any such agreement. The result of this was an investigation that revealed that the head of sponsorship and two accomplices were allegedly creating fake paperwork using Henkel stationery to get loans valued at $65m. They intended to use this money to pay for the sponsorship, but around $16m of that money is reported to be missing.
It is not clear how they intended to convince Henkel that it should agree to a sponsorship it was not funding. Henkel is now saying that it has no intention of honouring the deal signed by its employee (nor former employee) as he did not have the right to agree such a deal.
It is not clear how they intended to convince Henkel that it should agree to a sponsorship it was not funding. Henkel is now saying that it has no intention of honouring the deal signed by its employee (nor former employee) as he did not have the right to agree such a deal.
flemke said:
skwdenyer said:
joewilliams said:
I don't understand what the fraudster stood to gain. Was there a financial incentive, or did he just fancy pretending to be a big shot?
I do hope that the contract was signed in the UK. If so then, under the latest Companies Act, Brawn are (IIRC) entitled to rely upon a reasonable belief that the person signing the contract is authorised so to do. So long as they've checked some basics they could, in theory, get the money! The German courts may be less inclined to accept this.I wonder if Mercedes' management, seeing the extent of their problem, called up Schumacher and said "hey, we're desperate here, can you drive for us for a year so that sponsors fall over themselves to come on board?"
Recently I was involved (as a witness) in a suit in which a senior officer of a British company had made a commitment (of a very much smaller magnitude, and entirely for the bona fide purpose of benefiting the company) to a junior employee, of which commitment other senior officers were aware beforehand, and even there the barristers' view was that the commitment was not binding upon the company.
That a middle manager-type, who was one of 55,000 company employees, could surreptitiously commit that company inextricably to an £80m fraudulent sponsorship, which had not the slightest substance within the company except that he used their e-mail address, seems like a very slender reed on which a plaintiff might rely.
The Law said:
39 A company’s capacity
(1) The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution.
(2) This section has effect subject to section 42 (companies that are charities).
40 Power of directors to bind the company
(1) In favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, is deemed to be free of any limitation under the company’s constitution.
(2) For this purpose—
(a) a person “deals with” a company if he is a party to any transaction or other act to which the company is a party,
(b) a person dealing with a company—
(i) is not bound to enquire as to any limitation on the powers of the directors to bind the company or authorise others to do so,
(ii) is presumed to have acted in good faith unless the contrary is proved, and
(iii) is not to be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution.
(3) The references above to limitations on the directors' powers under the company’s constitution include limitations deriving—
(a) from a resolution of the company or of any class of shareholders, or
(b) from any agreement between the members of the company or of any class of shareholders.
(4) This section does not affect any right of a member of the company to bring proceedings to restrain the doing of an action that is beyond the powers of the directors.
But no such proceedings lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(5) This section does not affect any liability incurred by the directors, or any other person, by reason of the directors' exceeding their powers.
(6) This section has effect subject to—
*
section 41 (transactions with directors or their associates), and
*
section 42 (companies that are charities).
I apologise; my recollection was slightly hazy. In your case, if the senior officer was a Director then their word can be taken as binding upon the company without question, regardless of whether there was something in the company's constitution - or otherwise - preventing the Director from entering into that committment.(1) The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution.
(2) This section has effect subject to section 42 (companies that are charities).
40 Power of directors to bind the company
(1) In favour of a person dealing with a company in good faith, the power of the directors to bind the company, or authorise others to do so, is deemed to be free of any limitation under the company’s constitution.
(2) For this purpose—
(a) a person “deals with” a company if he is a party to any transaction or other act to which the company is a party,
(b) a person dealing with a company—
(i) is not bound to enquire as to any limitation on the powers of the directors to bind the company or authorise others to do so,
(ii) is presumed to have acted in good faith unless the contrary is proved, and
(iii) is not to be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company’s constitution.
(3) The references above to limitations on the directors' powers under the company’s constitution include limitations deriving—
(a) from a resolution of the company or of any class of shareholders, or
(b) from any agreement between the members of the company or of any class of shareholders.
(4) This section does not affect any right of a member of the company to bring proceedings to restrain the doing of an action that is beyond the powers of the directors.
But no such proceedings lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the company.
(5) This section does not affect any liability incurred by the directors, or any other person, by reason of the directors' exceeding their powers.
(6) This section has effect subject to—
*
section 41 (transactions with directors or their associates), and
*
section 42 (companies that are charities).
In the case of Brawn, my reading of the legislation is that if (in good faith) Nick Fry believed that the person he was dealing with had been given the authority to do the deal by a Director (such as, for instance, a forged letter to that effect), then that would bind the (alleged) sponsoring company to the contract under UK law.
What is interesting is whether this is binding upon the extant Brawn deal. If the deal is done in the UK, can UK law bind the German company? I would contend that it probably does, but it is a difficult precedent so might take a few years
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