Contractual capacity of corporations, Business Law and Ethics

Contractual Capacity of Corporations

However the courts have developed known as the doctrine to "ultra vires" in order for determines the contractual capacity for legal persons or corporations.

Conversely the gist of the doctrine is that a body corporate's contractual capacity is limited for the attainment of objects or purposes to that it was created.  Whether the corporation purports to enter with a contract to undertake a transaction whereas is neither expressly nor impliedly addicted to its objects. Therefore the contract is "ultra vires" like i.e. "beyond the powers of" like the corporation and is void and incapable, illegal of ratification.

Further this rule applies to statutory corporations and so co-operative societies and registered companies.  So then this can be illustrated through the case for Ashbury Railway Carriage and Iron Co. Ltd v. Riche whether in the House of Lords held that a company whose object was like inter-alia or as for make railway carriages could not contract to build a railway line and Riche could not sue the company to refusing for pay to the expenses incurred toward such the construction for the railway line.

Posted Date: 1/22/2013 2:38:25 AM | Location : United States

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