Charities Act 2011

218 Third parties

(1) Subject to subsection (3), the validity of an act done (or purportedly done) by a CIO is not to be called into question on the ground that the CIO lacked constitutional capacity.

(2) Subject to subsection (3), the power of the charity trustees of a CIO to act so as to bind the CIO (or authorise others to do so) is not to be called into question on the ground of any constitutional limitations on their powers.

(3) Subsections (1) and (2) apply only in favour of a person who gives full consideration in money or money’s worth in relation to the act in question, and does not know—

(a) in a subsection (1) case, that the act is beyond the CIO’s constitutional capacity, or

(b) in a subsection (2) case, that the act is beyond the constitutional powers of its charity trustees,

and (in addition) subsection (2) applies only if the person dealt with the CIO in good faith (which the person is presumed to have done unless the contrary is proved).

(4) A party to an arrangement or transaction with a CIO is not bound to inquire—

(a) whether it is within the CIO’s constitutional capacity, or

(b) as to any constitutional limitations on the powers of its charity trustees to bind the CIO or authorise others to do so.

(5) If a CIO purports to transfer or grant an interest in property, the fact—

(a) that the act was beyond its constitutional capacity, or

(b) that its charity trustees in connection with the act exceeded their constitutional powers,

does not affect the title of a person who subsequently acquires the property or any interest in it for full consideration without actual notice of any such circumstances affecting the validity of the CIO’s act.

(6) In any proceedings arising out of subsections (1) to (3), the burden of proving that a person knew that an act—

(a) was beyond the CIO’s constitutional capacity, or

(b) was beyond the constitutional powers of its charity trustees,

lies on the person making that allegation.

(7) In this section and section 219—

(a) references to a CIO’s lack of constitutional capacity are to lack of capacity because of anything in its constitution, and

(b) references to constitutional limitations on the powers of a CIO’s charity trustees are to limitations on their powers under its constitution, including limitations deriving from a resolution of the CIO in general meeting, or from an agreement between the CIO’s members, and the references to constitutional powers are to be read accordingly.