(1)The provisions of the rules of an incorporated friendly society are binding upon—
(a)each of the members and officers of the society,
(b)all persons claiming on account of a member or under its rules,
and all such members, officers and persons (but no others) shall be taken to have notice of the provisions of the rules.
(2)A party to a transaction with an incorporated friendly society who is not of a description mentioned in subsection (1)(a) or (b) above is not bound to enquire as to any limitation on the powers of the committee of management to bind the society.
(3)Subsection (4) below applies in relation to any act of an incorporated friendly society which is, or is deemed by section 8(4) above to be, within the capacity of the society and is decided upon by the committee of management acting beyond their powers under the constitution of the society.
(4)In favour of a person who—
(a)is not a person mentioned in subsection (1) above;
(b)gives valuable consideration for an act to which this subsection applies; and
(c)does not know that the act is beyond the powers of the committee of management;
the power of the committee of management to bind the society shall be deemed free of any limitation in the society’s constitution.
(5)Where an incorporated friendly society purports to transfer or grant an interest in property, the fact that the committee of management acted beyond their powers under the society’s constitution does not affect the title of a person who in good faith subsequently acquires the property or an interest in it for valuable consideration and without actual notice of the circumstances (if any) affecting the validity of the society’s act.
(6)Subsection (4) above does not affect—
(a)the right of a member of an incorporated friendly society to bring proceedings to restrain the doing of an act (other than an act done in fulfilment of a legal obligation arising from a previous act of the society) which is beyond the powers of the committee of management;
(b)the duty of the committee of management to act within their powers under the constitution of the society;
(c)any liability incurred by any person by reason of the committee of management exceeding their powers.
(7)Action by the committee of management of an incorporated friendly society which is beyond their powers under the society’s constitution but is within its capacity may be ratified by the society in general meeting in such manner as its rules may provide; but relief from any liability mentioned in subsection (6)(c) above must be agreed to by special resolution separate from any resolution ratifying the committee’s action.
(8)In this section—
(a)references to limitations on the committee’s powers under the constitution of the society include limitations deriving from a resolution of the society in general meeting or any agreement between the members of the society; and
(b)“transaction” includes any act.
(9)In any proceedings arising out of subsection (4) above, the burden of proving that a person knew that an act was beyond the powers of the committee of management lies on the person making the allegation.
(10)This section shall not affect the application, in relation to an incorporated friendly society, of any rule of law relating to the validity of acts which are within the capacity of a body corporate but may have been affected by defects arising from its internal management under its constitution.