Articles of associationStatutory contractKing's Bench Division

Hickman v Kent or Romney Marsh Sheepbreeders' Association

[1915] 1 Chancery 88119151 min read
The case in brief30-second read
Facts
Hickman was a member of the sheepbreeders' association (a company limited by guarantee) The articles contained a clause requiring disputes between members and the company to be referred to arbitration.
Issue
Whether the articles of association bind members in their capacity as members, making an arbitration clause therein enforceable against a member who seeks court proceedings.
Held
Astbury J held that the articles form a contract between the company and each member, and between each member and every other member. This contract is enforceable so long as the rights and obligations arise from membership. The arbitration clause bound Hickman as a member and the proceedings were stayed.
Principle
The articles of association constitute a contract between the company and its members, and between the members inter se, binding them in their capacity as members
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Facts

  • Hickman was a member of the sheepbreeders' association (a company limited by guarantee)
  • The articles contained a clause requiring disputes between members and the company to be referred to arbitration
  • Hickman brought court proceedings against the association regarding expulsion
  • The association applied to stay proceedings on the ground of the arbitration clause in the articles

Issue

  1. Whether the articles of association bind members in their capacity as members, making an arbitration clause therein enforceable against a member who seeks court proceedings.

Held

  • Astbury J held that the articles form a contract between the company and each member, and between each member and every other member. This contract is enforceable so long as the rights and obligations arise from membership. The arbitration clause bound Hickman as a member and the proceedings were stayed.

Ratio decidendi

The articles of association, upon registration, become a statutory contract binding the company and its members. The contractual effect of the articles operates in three dimensions: (1) binding the company to each member; (2) binding each member to the company; and (3) binding each member to every other member, but only in respect of membership rights and obligations. Rights claimed in a non-member capacity (e.g., as a solicitor, director, or creditor) are outside this statutory contract.

Exam use

How to use it in an answer

  • This is the leading case on the contractual nature of articles. Use it to explain what rights the articles confer and on whom, and to distinguish member-capacity rights from outsider/non-member rights. Pair with Eley v Positive to show the boundary.
  • Key quotable line: "The articles constitute a contract between the company and its members and between the members inter se in respect of their rights as members."

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Citation

Hickman v Kent or Romney Marsh Sheepbreeders' Association [1915] 1 Chancery 881

Reported: Chancery Reports. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.