Question

Which one of the following statements correctly explain the term 'doctrine of Indoor Management?

• A. The doctrine seeks to protect the outsiders against the company
• B. Every person dealing with the company is presumed to have read and understood the contents of company's Memorandum and Articles of association
• C. If a person enters into a contract with the company which is contrary to the provisions of Memorandum and Articles of Association, he will not get any right under such contract
• D. It protects the company against the outsiders.

Answer 1

The correct option is B Every person dealing with the company is presumed to have read and understood the contents of company's Memorandum and Articles of association

Option B is correct.

Doctrine of indoor management is an exception to rule of constructive notice. According to this doctrine, persons dealing with company are entitled to presume that internal requirements prescribed in the memorandum and articles have been properly observed.
They can assume that the members of the company are performing their acts within the scope of their apparent authority.