Whaley Bridge Calico Printing Co v Green
Rule established
A promoter occupies a fiduciary position towards the company and is accountable for any secret profit made
Facts
- Green purchased a calico printing business and then promoted a company to buy it at a higher price
- Green made a profit on the transaction without full disclosure to independent persons
- The company brought action to recover the secret profit
Issue
- Whether a person who sells property to a company he has promoted occupies a fiduciary position making him accountable for secret profits.
Held
- Bowen J held that a promoter is in a fiduciary position towards the company. The term "promoter" is not a term of law but of business, describing one who undertakes to form a company and sets it going. A promoter cannot make a secret profit out of the promotion and must account for any undisclosed gains.
Ratio Decidendi
A promoter stands in a fiduciary relationship to the company from the moment of its formation. This fiduciary character arises from the fact that the promoter has the power to shape the company's constitution and early transactions. Any profit made by the promoter in dealings with the company must be disclosed, and if not disclosed, the promoter must account for it.
How to use it in an exam
- Use this case to define who qualifies as a "promoter" (a term of business, not of law) and to establish the basic fiduciary accountability for secret profits. It complements Erlanger and Gluckstein by providing Bowen J's classic definition.
- Key quotable line: "The term 'promoter' is a term not of law but of business, usefully summing up in a single word a number of business operations familiar to the commercial world."
Source
Source: Queen's Bench Division Reports
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.
Cited in study notes
PromotersDefinition and fiduciary position of promoter