Q.What is meant by the doctrine of "Ultra Vires"?

A company's Memorandum does not just describe its business — it legally seals the company off from doing anything outside it. …

The doctrine of ultra vires literally means "beyond the powers". Because the Object Clause of a company's Memorandum of Association fixes the exact scope of business the company is permitted to carry on, any act the company undertakes outside that stated scope is ultra vires the company. Such an act is void from the very outset, not merely irregular, and it cannot be made valid later even by the unanimous consent of every shareholder. The doctrine exists to protect two groups: shareholders, who invested their money expecting it to be used only for the stated objects, and outside parties such as creditors, who are entitled to rely on the publicly filed Memorandum to know exactly what business risks the company may lawfully take on. A contract that is ultra vires the company cannot be enforced by the company against the oth …

A common error is confusing an act that is ultra vires the company (void, and never ratifiable, because it exceeds the Memorandum) with an act that is merely ultra vires the directors or the Articles (which is usually within the company …