Erlanger v New Sombrero Phosphate Co (1878) ruled that fiduciary promoters of a company must fully disclose all material facts when selling property to the company. The case established that contracts made under concealment or misrepresentation by promoters could be rescinded.
Fiduciary Duty of Promoters: Promoters are in a fiduciary position towards the company they create. They must fully disclose all material facts related to any transaction, ensuring the company can make an informed decision. Failure to do so can lead to the rescission of contracts.
