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Yu Chuck V. Kong Li Po

Chen entered into a 3-year contract with plaintiffs Yu Chuck, Mack Yueng and Ding Moon for printing services for the newspaper Kong Li Po where Chen was general manager. Before the contract expired, Chen left and a new manager discharged the plaintiffs. The plaintiffs sued Kong Li Po, who claimed Chen lacked authority to make the contract. The Supreme Court ruled Chen did not have authority as general manager to bind Kong Li Po to such a long-term, onerous contract without express authorization.

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42 views1 page

Yu Chuck V. Kong Li Po

Chen entered into a 3-year contract with plaintiffs Yu Chuck, Mack Yueng and Ding Moon for printing services for the newspaper Kong Li Po where Chen was general manager. Before the contract expired, Chen left and a new manager discharged the plaintiffs. The plaintiffs sued Kong Li Po, who claimed Chen lacked authority to make the contract. The Supreme Court ruled Chen did not have authority as general manager to bind Kong Li Po to such a long-term, onerous contract without express authorization.

Uploaded by

roland deschain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Yu Chuck V.

Kong Li Po

Facts: CC Chen or TC Chen was appointed as general business manager of the newspaper, Kong Li Po. He entered into a contract with the
plaintiffs, Yu Chuck, Mack Yueng and Ding Moon, by which the latter bound themselves to do the necessary printing for the newspaper for
three years. Before the expiration of the contract of employment , a new manager, Tan Tian Hong, was appointed; Chen left for China and
the services of the plaintiffs were discharged with no special reason. The plaintiffs then filed a complaint against Ko Ling Po. In its defense,
Ko Ling Po claimed that Chen had no authority to enter into contract of employment.

Issue: WON Chen had authority to bind Ko Ling Po by a contract of employment.

Ruling:
No, the Supreme Court held that Chen had no authority to bind Ko Ling Po by the contract of employment with the plaintiffs.

It is a general rule that the power to bind a corporation by contract rests in its board of directors or trustees, but this power may either,
expressly or implied, be delegated to other officials or agents of the corporation. Chen, as general manager of the Kong Li Po, had implied
authority to bind the latter by a reasonable and usual contract of employment only. In the absence of express limitations, a manager has
authority to hire an employee for such a period as is customary or proper under the circumstances, such as for the year, for the season, or
for two seasons. But unless he is either expressly authorized, or held out as having such authority, he cannot make a contract of
employment for a long future period, such as for three years, although the contract is not rendered invalid by the mere fact that the
employment extends beyond the term of the manager’s own employment. Since the contract entered into with the plaintiffs was unusually
long and the conditions are otherwise onerous to Ko Ling Po that the possibility of the corporation being thrown into insolvency thereby is
expressly contemplated in the same contract, such contract is not within the authority of Chen and therefore invalid.

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