Principles laid down in Royal British Bank vs. Turquand

 This landmark case established the Doctrine of Indoor Management, which serves as a protection for outsiders dealing with a company.

• The Principle: While outsiders are expected to know the "public" documents of a company (Memorandum and Articles of Association) under the Doctrine of Constructive Notice, they are not bound to inquire into the regularity of the company’s internal proceedings.

• The Ruling: In this case, the company's directors had the power to borrow money if authorized by a resolution. They borrowed money from the bank without such a resolution. The court held that the bank was entitled to assume that the internal resolution had been passed, and the company was held liable for the debt.

• Exceptions: This doctrine does not apply if the outsider has actual knowledge of the internal irregularity or if the transaction involves forgery.