Q.Discuss the legal consequences that follow when a company enters into a transaction beyond the objects stated in its Memorandum of Association.

An ultra vires act does not just fail to bind the company — it produces a specific set of consequences worth listing precisely for an exam answer.

When a company does something genuinely outside the objects stated in its Memorandum of Association, several distinct legal consequences follow, and a thorough answer should separate them rather than treat "ultra vires" as producing one single undifferentiated effect.

First, the transaction itself is void ab initio — void from the very beginning, not merely voidable at someone's option. This means neither party can enforce it: the company cannot sue the other party to compel performance, and the other party cannot sue the company either, because a transaction that never had legal existence cannot be the basis of an enforceable claim on either side. Any property or money that has actually changed hands under an ultra vires contract may, depending on the circumstances, need to be restored to the party from whom it came, since the law tries to prevent either side being unjustly enriched by a transaction it will not otherwise recognise.

Second, and this is the point that most sharply distinguishes ultra vires acts from ordinary contractual defects, the transaction cannot be cured by ratification. If a contract is merely irregular — say, it falls comfortably within the company's stated objects but was entered into by an officer who exceeded the specific authority the articles gave that individual — the shareholders can ratify it after the fact, and once ratified it becomes binding as though it had been properly authorised from the start; this is because such an act was always intra vires the company itself, only irregular as to internal authorisation. An ultra vires act enjoys no such escape route, because the defect lies in the company's own power, not merely in an officer's individual authority, and shareholders cannot vote to expand the company's own charter informally. …