Section 173 codifies the principle of law under which directors must exercise independent judgment, namely they must not fetter their discretion, unless they act in accordance with an agreement that has been duly entered into by the company or in a way authorised by the company's constitution. This could be regarded as an illustration of the general duty to act in good faith, as a consequence of the principle prohibiting conflicts of duty and interest or even perhaps as a breach of the duty to exercise reasonable care, skill and diligence, but it is set out separately in the statutory code. The principles established in the case-law and described in 15[11A] below are now clearly comprehended by s 173.1
Directors representing 'outside' interests
Sometimes a director may engage himself, contractually or in a less formal way, to exercise his powers