This Doctrine can be considered as the central principle in the whole of Administrative Law. Any piece of primary legislation that grants the power to make public policy to a body other than the Oireachtas is unconstitutional; however, as there is a presumption in Irish constitutional law that the Oireachtas acts within the confines of the Constitution, any legislation passed by the Oireachtas must be interpreted in such a way as to be constitutionally valid where possible. It permitted a corporation to accept the benefits of a contract and then refuse to perform its obligations on the ground that the contract was ultra vires. The 8 th clause of the articles of association, provided that the capital produced by the issue of B shares shall, so far as is necessary, be applied in making good to the holders of A shares the preferential dividend of £5 per cent. An ultra vires act is one beyond the purposes or powers of a corporation.
This invariably means, powers have to be delegated to sub-ordinate bodies for the smooth functioning and administration of these bodies and ventures, as the Parliament cannot run all these bodies on its own. An ultra virus act occurs when one commits an act that is beyond the powers or purpose of a corporation, e. The power of the Board as regards contribution to funds, which do directly relate to business of the company is unrestricted. In many jurisdictions, such as Australia, legislation provides that a corporation has all the powers of a natural person plus others; also, the validity of acts which are made ultra vires is preserved. In this case the House of Lords affirmed the principle laid down in Ashbury RailwayCarriage and Iron Company Ltd v. In corporate law, ultra vires describes acts attempted by a corporation that are beyond the scope of powers granted by the corporation's objects clause, articles of incorporation or in a clause in its Bylaws, in the laws authorizing a corporation's formation, or similar founding documents.
The doctrine of ultra vires played an important role in the development of corporate powers. This is a similar concept that refers to the apparently authorized status of the action, as distinguished from the unauthorized status of their actions, which ultra vires refers to. For example, under traditional ultra vires doctrine, a corporation that had as its purpose the manufacturing of shoes could not, under its charter, manufacture motorcycles. As a result, an act which is ultra vires is void, and does not bind the company. Hector Riche 1875 of the Law Reports 653, the House of Lords considered the validity of a contract entered into by the directors of a company, which did not come within the objects of that company as stated in the Memorandum of Association. Thus, the contract entered into by the company was not a voidable contract merely, but being in violation of the prohibition contained in the Companies Act , was absolutely void. An ultra vires act is one beyond the purposes or powers of a corporation.
The position was changed by statute by the which largely abolished the doctrine in relation to commercial companies. But I agree with Lord Justice James that this doctrine ought to be reasonably, and not unreasonably, understood and applied, and that whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorized, ought not unless expressly prohibited to be held, by judicial construction, to be ultra vires. Here, the House of Lords approved the doctrine of ultra vires with some refinement that lend it a greater flexibility. However, in construing the relevant statutory provisions the Court will bear in mind the need to promote the general legislative purpose underlying these provisions and consider whether the impugned act is incidental to or consequential upon the express provisions. Anisminic is better known for not depriving courts of their jurisdiction to declare a decision a nullity, even if a statute expressly prevents the decision being subject to judicial review. The earliest legal view was that such acts were void. The House of Lords held the contract as ultra vires the company and, therefore, declare it null and void.
It does not restrain a company from doing such things which are reasonably fair and incidental to its objects or which it is authorised to do under the Companies Act. This term is frequently used in business and agency law the Doctrine of Ultra Vires. Later on, in the case of Attorney General v. Any activity done out of the purview of the memorandum is considered as an ultra vires activity. If on the other hand the application becomes too strict, local authorities will enjoy a narrower power than what the Parliament intended they should have; and ultimately they would exercise no independent power at all.
In corporate law, ultra vires describes acts attempted by a corporation that are beyond the scope of powers granted by the corporation's , or in a clause in its , in the laws authorizing a corporation's formation, or similar founding documents. The law, however, does not require that the consent of all the shareholders should be obtained at the same place and in the same meeting. Most importantly, multiple purposes clauses and general clauses that permit corporations to engage in any lawful business are now included in the articles of incorporation. There is difference between objects and powers. Acts attempted by a corporation that are beyond the scope of its charter are void or voidable. While both the charter and the bylaws can be amended by , companies sometimes take actions outside the scope of their charters without first receiving permission to do so. If shareholders deem ultra vires activities to be harmful to them or to have the potential of harm, they may sue the company for.
Link to this page: ultra vires. In the case of , however, the Irish Supreme Court held that the Oireachtas may delegate certain powers to subordinate bodies through primary legislation, so long as these delegated powers allow the delegatee only to further the principles and policies laid down by the Oireachtas in primary legislation and not craft new principles or policies themselves. Sometimes the expression ultra vires is used to describe the situation when the directors of a company have exceeded the powers delegated to them. Almost unheard of in modern times, ultra vires acts by the Crown or its servants were previously a major threat to the. The act, in this case, even though it is not illegal, might be outside the scope of the corporate charter and, therefore, voidable under ultra vires doctrine. This rule is meant to protect the interests of the shareholders and creditors of the company.
. For example, under traditional ultra vires doctrine, a corporation that had as its purpose the manufacturing of shoes could not, under its charter, manufacture motorcycles. To prove that a governmental body or corporation acted ultra vires often requires extensive litigation over the language contained in the constitution or corporate charter. Even if they are stated, they can be used only to achieve the objects of the company. The principle underlying the exercise of such powers is that a company, in carrying on the business for which it is constituted, must be able to pursue those things which may be regarded as incidental to or consequential upon that business. Ultra vires contracts are void ab initio and hence cannot become intra vires by reason of estoppel or ratification. But where it involves exercising discretion on any question delegated, then there is room for abuse and the doctrine of Ultra vires would apply if the discretion had been exercised unreasonably or in bad faith or on no proper evidence.