In this case, a real right of extension was sold to the trust, who had 3 trustees. The sale agreement was only signed by one trustee and there was no duly signed resolution authorising the transaction. The trust failed to deliver guarantees in time and was in breach of the agreement. The seller tried to hold the trust, and all trustees, bound by the agreement. The court found in favour of the trust, stating that this agreement was void and of no force and effect as it was not properly authorised.
The seller then sought to hold the trustee who signed on behalf of the trust to the agreement, in his personal capacity, based on the usual warranties contained in an agreement where a natural person acts on behalf of an entity. The court found that there was no debt that the trust was liable for, since the contract never came into existence and as such the trustee could not be held liable for the performance of such a non-existing debt. The seller lost the case and was not given any legal recourse.
This case highlights the importance of ensuring that a resolution signed by all trustees is in place prior to entering into an agreement of sale.