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An individual
director cannot escape liability for personal dishonesty by claiming
that he or she is acting on behalf of the company.
Incombank
issued a letter of credit to Oakprime Ltd that was confirmed by Standard
Chartered Bank. The managing director of Oakprime fraudulently arranged
for Pakistan National Shipping Corporation to backdate bills of lading
in order to obtain payment under the letter of credit. Standard Chartered
waived late presentation and authorised payment but later sued Pakistan
National Shipping, Oakprime and the managing director for deceit.
The House
of Lords held that the managing director was the only human being involved
in making the representation on behalf of Oakprime and he could not
escape personal liability. It did not suffice that the fraudulent representation
had been made on behalf of Oakprime rather than personally - an individual
director cannot escape liability for dishonesty by claiming he is acting
on behalf of his company.
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