Contractual Power and Validity of Action
In terms of prescribed management rule 10 a document (including contracts) is only valid and binding on the body corporate if it is signed by two trustees or by one trustee and the managing agent. This does not mean that a trustee who signs the contract is authorized to do so as the STSM Act empowers the body of trustees, and not individual trustees to perform the functions and exercise the powers of the body corporate. A third party cannot assume that such a trustee has the delegated authority to conclude the contract. This is also true for the chairperson as neither the STSM Act nor the prescribed management rules give the chairperson any special contracting authority. Therefore, the third party dealing with an individual trustee, and not the body of trustees, should make sure the trustee is acting in terms of a delegated authority or that the body of trustees have approved the contract by way of a trustee resolution.
