M'Morland's Trustees v. Fraser and Others

Subject_1 Company Subject_2 Prospectus Subject_3 Failure to Disclose Contract Subject_4 Companies Act 1867 (30 and 31 Vict. c. 131), sec. 38 Facts: In order to recover damages under the Companies Act 1867, sec. 38, from the persons issuing the prospectus of a company, for failure to disclose a contract, it must be proved affirmatively that the person taking shares has done so in consequence of having relied on the statements in the prospectus.

Circumstances in which held , in accordance with the above rule, that this had not been proved.

Question whether the fact that the vendors and promoters were the sole directors affected their liability under the statute.

On 30th June 1892 a minute of agreement was entered into between James and William Wood, and James Wood and William Wood as individuals, of the first part, and George Anderson, coalmaster, Glasgow, and the defender William Fraser, of the second part, whereby the first parties agreed to sell, and the second party to purchase, the Bryndu, Cefu, and Glyn Collieries in South Wales, at the price of £30,000, with entry at 1st July 1892.

On 18th August 1892 a second minute of agreement was executed, which was practically identical with the agreement of 30th June, except that the name of the defender M'Killop was introduced as one of the partties of the second part, the date of entry being “as on 1st July 1892.”