Distinction From Other Legal Concepts
Conceptually, it is important to distinguish failure of a transaction for want of corporate benefit from other related legal concepts. These include:
- Failure of consideration: Under contract law in most common law legal systems, to be enforceable a contract requires both parties to provide consideration (i.e. something of value). However, the consideration does not need to be equal, and the gratuity given in Hutton v West Cork Railway Co would still have failed for want of corporate benefit if, for example, the company had allowed employees to purchase company property at a discount.
- Transactions at an undervalue: Although most examples of failure for want of corporate benefit involve transactions which were either a gift, or were made at a substantial undervalue, the concept is different in purpose and effect from provisions of insolvency law which prohibit undervalue transactions at a time when the company is insolvent.
Read more about this topic: Interest Of The Company
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