The doctrine of substantive ultra vires law teacher. While it is right to insist on the fundamental status of the common law as a framework of. This article will proceed to analyse the administrative law in the united kingdom and sri lanka. Any act which requires legal authority, and if done with such an authority, it is characterized in law as intra vires literally meaning within the powers, and if done without such authority, it is ultra vires. Should the ultra vires doctrine be left entirely to the ameri. It is true to say with bernard schwartz, that the goal of administrative law is to ensure that the individual and the state are placed on a plane of equality before the bar of justice. Beyond the powers describing an act by a public authority, company, or other body that goes beyond limits of the powers conferred on it. The doctrine of ultra vires has also been given a very wide meaning. A telephone company put up telephone wires in a certain. The ultra vires doctrine the doctrine of ultra vires is said to. In a proceeding by a member or a director against the corporation to enjoin the act. Pdf there is a growing literature concerning the role of the ultra vires doctrine and its place within administrative law. The doctrine of substantive ultra vires lawteacher. A company, therefore, can do anything within the scope of.
For some the doctrine is the central principle of administrative law, without which judicial intervention would rest on uncertain foundations. The doctrine of ultra vires is a fundamental rule of company law. The term ultra vires has been an important part of the literature on administrative law for decades. An ultra vires act is void and cannot be ratified even if all the directors wish to ratify it. If someone needs the legal authority to do something. Mar 17, 2018 the doctrine of ultra vires applies to the memorandum of a company. Its opposite, an act done under proper authority, is intra vires within the powers. It states that the objects of a company, as specified in its memorandum of association, can be departed from only to the extent permitted by the act. Doctrine of ultra vires in public law 3012 words bartleby. The doctrine of ultra vires and its subsequent development in the frame work of.
The doctrine of ultra vires applies to the memorandum of association of a company. Ultra vires act at the suit of his member but any contract entered into by the. Christopher forsyth, of fig leaves and fairy tales. A company called the ashbury railway carriage and iron company, was incorporated under the companies act, 1862. Any act that lies beyond the authority of a corporation to perform. This means that someone is acting beyond the scope of the authority or power that is granted to him by law, contract, or agreement. Neither the company can sue, nor it can be sued for such acts.
The term ultra vires in connection with law regarding companies is defined in the following way. Jan 08, 2018 in memorandum of association of the company, there is a object clause. This doctrine can be considered as the central principle in. The ultra vires doctrine has been a topic in company law that has had considerate attention though out its history. Though largely obsolete in modern private corporation law, the doctrine remains in full force for government entities.
Any act which requires legal authority, and if done with such an authority, it is characterized in law as intra vires literally meaning within the powers. The doctrine of ultra vires as used in administrative law implies that discretionary powers must be exercised for the purpose for which they were granted. Doctrine of ultra vires in common law and its relevance. The doctrine envisages that an authority can exercise only so much power as is conferred on it by law. Investment acquired through ultra vires transaction. Ultra vires acts fall outside the powers that are specifically listed in a corporate charter or state law. Hence, if the company does an act, or enters into a contract beyond the powers of the directors andor the company itself, then.
Ultra vires acts fall outside the powers that are specifically listed in. Doctrine of ultra vires the memorandum, being the constitution of the company sets out the principal objectives, powers, scope and its area of operation, both internal and external. The ultra vires doctrine is a kind of insurance policy that reassures a companys shareholders and creditors that the company will not use their assets or funds for any purposes other than those that are afforded to it, and specified within the ultra vires doctrine. Most countries have restricted the doctrine of ultra vires in relation to companies by statute. Pdf why kenya should reconsider its ultra vires doctrine. Doctrine of ultra vires objectives effects ratification. Ultra vires definition, meaning, examples, cases, processes. Courts have extended the meaning to limit the powers of. The disappearance of the ultra vires doctrine in greater.
England evolution of the concept of doctrine of ultra vires as previously mentioned, the first time england acknowledged the doctrine of ultra vires was in 1612. A company incorporated under the companies act had legal personality only for the purposes. Sep 11, 2016 doctrine of ultra vires explained by advocate sanyog vyas sanyog vyas law classes. The doctrine of ultra vires is produced by the constitutional principles of the rule of law, the sovereignty of parliament and the independence of the judiciary. If they did so, the courts declared such acts ultra vires and therefore. At the inception, the application of the doctrine was designed exclusively to ensure that administrative authorities do not exceed or abuse their legal powers. However, the directors later repudiated the contract on the grounds of the ultra vires of. If any act is ultra vires the articles, it can be rectified by a special resolution at a general meeting.
The doctrine of ultra vires applies to the memorandum of a company. Administrative power is generally derived from legislation. The case of ashbury railway carriage and iron company v. These statutes arguably carry more weight than case law, and future litigation. Meaning of the latin term ultra vires from the university of kent.
The doctrine of ultra vires has its genesis in the case of ashbury railway carriage and iron co. An act is said to be ultra vires, when it is in excess of the power of the person or authority doing it4. Doctrine of ultra vireseffects and exceptions essay. Intra vires the company but not done in prescribed manner, this can be validated by shareholders consent. Doctrine of ultra vires explained by advocate sanyog vyas. The object clause of the memorandum of the company contains the object for which the company is formed. While it is right to insist on the fundamental status of the common law as a framework of principles. The ultra vires doctrine in a broad sense, the latin expression ultra vires is used by lawyers to describe acts which have been conducted beyond the legal powers of those who have purported to undertake them. Ultra vires doctrine under company law all you need to know. Doctrine of ultra vireseffects and exceptions concept the object clause of the memorandum of the company contains the object for which the company is formed. Doctrine of ultra vires explained by advocate sanyog vyas sanyog vyas law classes.
An ultra vires act is one beyond the purposes or powers of a corporation. However, after the introduction of the limited liability partnership act, the real importance of the doctrine of ultra vires came to light. In contrast, a number of commentators argue that administrative law is a. What is meant by the doctrine of ultra vires in company law. The doctrine of ultra vires could not established its roots. An action of the authority is intra vires when it falls within the limits of the power conferred on it but ultra vires if it goes outside this limit. The doctrine envisages that an authority can exercise only so much power as is conferred on it.
With recent changes in the form of the new companies act of 2008 new light has been brought to the continued evaluation of this doctrine. The doctrine of ultra vires played an important role in the development of corporate powers. There is a growing literature concerning the role of the ultra vires doctrine and its place within administrative law. Ultra vires is a latin phrase that translates to beyond the powers. Doctrine of ultra vires the concept of doctrine of ultra. Doctrine of ultra vires has provides protection to the investors and creditors o the company. Delegated legislation that contains provisions not.
Ultra vires revisited oxford university research archive. At present the doctrine of ultra vires is attracted in exercise of the power that is lawfully conferred on the authority concerned whether it is legislative, administrative or quasi judicial if it is alleged and shown that. Thus, in the case of suttons hospital of the year, despite the fact that the company had a separate existence in the eyes of law, the doctrine of ultra vires did not apply. This doctrine can be considered as the central principle in the whole of administrative law. After the neglect of administrative law in the early part of the twentieth.
The earliest legal view was that such acts were void. Introduction ultra means beyond vires means powers an act of the company which beyond the objects clause. The doctrine of ultra vires as used in administrative law. Riche 1875 3 set out the standard for the ultra vires rule. Nov 11, 20 an act is said to be ultra vires, when it is in excess of the power of the person or authority doing it4. The memorandum of association contains the permitted range of activities in its objects clause and a company cannot practice any other activity which is not defined under the scope of objectives mentioned in the memorandum. The memorandum of association contains the permitted range of activities in its objects clause and a company cannot practice any other activity which is not defined under the scop. Still the central principle of administrative law mark elliott i. Except as provided in subsection b, corporate action may not be challenged on the ground that the corporation lacks or lacked power to act. Being a precious part of the edifice of administrative justice, the law of ultra vires has evolved as powerful tool of. A company, therefore, can do anything within the scope of the powers specified in the memorandum.
An act which requires legal authority but is done without it, is characterised in law as ultra vires. An act of the company must not be beyond the objects clause, otherwise it will be ultra vires and, therefore, void and cannot be ratified even if all the members wish to ratify it. The latin phrase ultra vires is a combination of latin words which refers to beyond the powers. Aug 22, 2011 at present the doctrine of ultra vires is attracted in exercise of the power that is lawfully conferred on the authority concerned whether it is legislative, administrative or quasi judicial if it is alleged and shown that. If company goes beyond its object then the act is ultra vires in eyes of law. The doctrine of ultra vires assumed a vital part in the improvement of corporate development. The ultra vires doctrine in a constitutional setting. According to the ultra vires doctrine, a person or a body cannot perform an administrative act or exercise a power unless he or it is authorized to do so by statute. In contrast, a number of commentators argue that administrative law is a body of judgemade common law which is unrelated to the will of parliament. There is an agency relationship between the investors who are the real owners and the directors of the company and thereby it is imperative that the there should be limitations with regards to the decision making powers of the directors so as not to indulge in activities that the company is not formed for.
If they did so, the courts declared such acts ultra vires and therefore, invalid. The doctrine of ultra vires is the basic doctrine in administrative law. It follows that a voidable act is intra tires yet every unlawful administrative act must be ultra vires and void. Thus there must exist some power under which it is made. Ultra vires is a latin phrase meaning beyond the powers. Doctrine of ultra vires company law common law private law. Section associated with the doctrine of ultra vires of the companies act is section 20 1, 20 2 a, b, c and 20 3.
In the first part the definition and historic background vein and in second part what progress has happened after 1 july 1998 has discussed. Ultra vires is opposite from intra vires, which is latin for within the powers. Why kenya should reconsider its ultra vires doctrine in corporate law. Ultra vires the directors but intra vires the company can be ratified by shareholders in agm. If an act or transaction is ultra vires the directors i. The memorandum of association will determine what a companys legal capacity is, thus the doctrine of ultra vires and the relevant statutory provisions will follow. Section 20 1 provides no action prosecuted as an act ofshall be invalid by reason only the fact that the company does not have the ability or authority to act. Effects of ultra vires transactions doctrine of ultra vires.