Effect of ultra vires transaction, Business Law and Ethics

Effect of Ultra Vires Transaction:

 An ultra vires transaction with a company may result in:

a) a transfer of specific property to the company, or

b) money being lent to the company.

The remedies available against the company will be as follows.

 Property Transferred

If specific property is transferred to a company pursuant to a transaction which, unknown to the transferor, is ultra vires the company, the ownership of the property is not transferred. The property remains the property of the transferor while the company only acquires possession of it. This is because an ultra vires transaction cannot constitute a "contract" which, pursuant to the Sale of Goods Act, s.3, is capable of vesting or transferring the ownership of the property in the transferee company. The transferor, on becoming aware of the legal position, would be entitled to trace his property and, on finding it, take possession of it. This remedy is known as "tracing".

The company has no right to retain the property and its attempt to do so would constitute the tort of detinue.

The other consequence of this rule is that, since there was no contract of sale, the transferor cannot sue the company for breach of contract, or the agreed price. The legal position in the converse situation is not clear. It is probable that the company cannot recover its property by tracing if the transferee is willing to pay the agreed price. However, the company might be able to recover it if the transferee has failed or refused to pay for it because to allow him to retain it after refusing to pay for it would constitute "unjust enrichment" which a court of equity is unlikely to condone.

Posted Date: 1/12/2013 2:37:14 AM | Location : United States







Related Discussions:- Effect of ultra vires transaction, Assignment Help, Ask Question on Effect of ultra vires transaction, Get Answer, Expert's Help, Effect of ultra vires transaction Discussions

Write discussion on Effect of ultra vires transaction
Your posts are moderated
Related Questions
QUESTION (a) What is a contract and what are the elements of a valid and enforceable contract according to English Law? (b) List down 5 main documents which form part of a b

Question 1: (a) What do you understand by the term Logistics Management? (b) What are the three types of costing which come under storage? (c) Explain the role of Public

STATE SUCCESSION International law regulating state succession deals with the situation where there is a change in sovereignty over a particular territory. State succession occ

Partnership Law However section 3(1) of the Partnership Act characterize like partnership; such; Therefore "The relation that subsists between persons carrying at a busines

CREDITORS' VOLUNTARY WINDING UP: If no declaration of solvency is made and delivered to the registrar, the liquidation process is a creditors' voluntary winding up even if i

State the legal consequences of an wrongful act Article 28, 30 and 31 state the legal consequences of an internationally wrongful act. They are as follows:- Article 28: Lega

Pat Clark is the controller for Best Pharma, a publicly-held pharmaceuticals manufacturer in Wilmington, Delaware.  In early December 2011, Pat's boss, CEO Bernie Skilling, approac

Representations Regarding Character or Credit Since statements relating to a person's credit-worthiness will only be actionable whether made in pursuance of a contract that wa

Differences Between Cheques And Other Bills of Exchange However the following are some of such the differences between like cheques and such other bills of exchange: like;

State the International policy coordination In an international context governments can, in theory, offset adverse spillover effects originating from other nations. With fewer