The two situations set out above are superficially similar. The lesson to be learned from the decision of the House of Lords in Criterion Properties Plc v. Stratford UK Properties Llc 1 is that they are distinct and authorities concerning one situation cannot be transplanted to the other.

The claimant company entered into a partnership agreement with the defendant for the purpose of investing in real property. The agreement created a new company in which both parties held shares. By a separate agreement, the claimant granted the defendant a ‘‘put option’’ requiring the claimant to buy the defendant’s interest in the new company upon the happening of certain events. The events were any change in the control of the claimant or either of the two signatory directors ceasing to be directors of the company. The purpose of the put option was to inflict adverse financial consequences on the claimant company should it be subject to a hostile takeover but it would also prevent or inhibit the dismissal of the two directors who signed the deal. Such a transaction is commonly termed a ‘‘poison pill’’. One of the two directors was dismissed, possibly because of his having agreed to the put option. The claimant sought a declaration by way of summary judgment that the put option was unenforceable because of a lack of actual or apparent authority on the part of the two directors who signed to have made an agreement which was patently not in the best interests of the claimant company.

In answering the question whether a contract entered into by a director without actual or apparent authority can be set aside and benefits conferred under that contract recovered, the courts, up to the level of the Court of Appeal, have considered that the question should be answered in the same way as a claim for knowing receipt of trust property transferred

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