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Question
Explain the following term/concept.
Ultra Vires act
Solution
(1) the term ‘ultra’ means beyond and the term ‘Vires’ means powers. Accordingly ‘Ultra Vires’ means beyond or outside the scope of powers or authorities of Memorandum. Thus the doctrine of ultra Vires specifies that any activity done by a company which is beyond the power or authority of Memorandum or company will be null and void.
(2) The act which is ultra Vires is legally ineffective even if such an act is ratified by the members later on. For ultra Vires acts, the company cannot sue anybody in the court of law. Similarly, the third party for such an ultra Vires act cannot sue the company in the court of Law for any compensation. The members of the company can get an order issued from the court to stop the company from doing the ultra Vires act.
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