Ultra vires
Encyclopedia
Ultra vires is a Latin
Latin
Latin is an Italic language originally spoken in Latium and Ancient Rome. It, along with most European languages, is a descendant of the ancient Proto-Indo-European language. Although it is considered a dead language, a number of scholars and members of the Christian clergy speak it fluently, and...

 phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is
characterised in law as intra vires (literally "within the powers"; standard legal translation and substitute, "within power"). If it is done without such authority, it is ultra vires. Acts that are intra vires may equivalently be termed "valid" and those that are ultra vires "invalid".

Corporate law

In corporate law, ultra vires describes acts attempted by a corporation that are beyond the scope of powers granted by the corporation's objects clause
Objects clause
An objects clause is a provision in a company's constitution stating the purpose and range of activities for which the company is carried on. In UK company law up until reforms in the Companies Act 1989 and the Companies Act 2006, an objects clause circumscribed the capacity, or power, of a company...

, articles of incorporation
Articles of Incorporation
The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...

 or in a clause in its Bylaws, in the laws authorizing a corporation's formation, or similar founding documents. Acts attempted by a corporation that are beyond the scope of its charter are void
Void (law)
In law, void means of no legal effect. An action, document or transaction which is void is of no legal effect whatsoever: an absolute nullity - the law treats it as if it had never existed or happened....

 or voidable
Voidable
In law, a transaction or action which is voidable is valid, but may be annulled by one of the parties to the transaction. Voidable is usually used in distinction to void ab initio and unenforceable....

.
  1. An ultra vires transaction cannot be ratified by shareholders, even if they wish it to be ratified.
  2. The doctrine of estoppel
    Estoppel
    Estoppel in its broadest sense is a legal term referring to a series of legal and equitable doctrines that preclude "a person from denying or asserting anything to the contrary of that which has, in contemplation of law, been established as the truth, either by the acts of judicial or legislative...

     usually precluded reliance on the defense of ultra vires where the transaction was fully performed by one party
  3. A fortiori, a transaction which was fully performed by both parties could not be attacked.
  4. If the contract was fully executory, the defense of ultra vires might be raised by either party.
  5. If the contract was partially performed, and the performance was held to be insufficient to bring the doctrine of estoppel into play, a suit for quasi contract for recovery of benefits conferred was available.
  6. If an agent of the corporation committed a tort
    Tort
    A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...

     within the scope of his or her employment, the corporation could not defend on the ground the act was ultra vires.


Several modern developments relating to corporate formation have limited the probability that ultra vires acts will occur. Except in the case of non-profit corporations (including municipal corporations), this legal doctrine is obsolescent
Desuetude
In law, desuetude is a doctrine that causes statutes, similar legislation or legal principles to lapse and become unenforceable by a long habit of non-enforcement or lapse of time. It is what happens to laws that are not repealed when they become obsolete...

; within recent years, almost all business corporations are chartered to allow them to transact any lawful business. The Model Business Corporation Act
Model Business Corporation Act
The Model Business Corporation Act is a model set of law prepared by the Committee on Corporate Laws of the Section of Business Law of the American Bar Association and is followed by twenty-four states.-History:...

 of the United States states that: "The validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act." The doctrine still has some life among non-profit corporations or state-created corporate bodies established for a specific public purpose, like universities
University
A university is an institution of higher education and research, which grants academic degrees in a variety of subjects. A university is an organisation that provides both undergraduate education and postgraduate education...

 or charities.

According to American laws, the concept of ultra vires can still arise in the following kinds of activities in some states:
  1. Charitable or political contributions
  2. Guaranty of indebtedness of another
  3. Loans to officers or directors
  4. Pensions, bonuses, stock option plans, job severance payments, and other fringe benefits
  5. The power to acquire shares of other corporations
  6. The power to enter into a partnership

United Kingdom

In the United Kingdom, the Companies Act 2006
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...

 sections 31 and 39 greatly reduced the applicability of ultra vires in corporate law, although it can still apply in relation to charities and a shareholder may apply for an injunction
Injunction
An injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing certain acts. A party that fails to comply with an injunction faces criminal or civil penalties and may have to pay damages or accept sanctions...

, in advance only, to prevent an act which is claimed to be ultra vires.

In many jurisdictions, such as Australia, legislation provides that a corporation has all the powers of a natural person plus others; also, the validity of acts which are made ultra vires is preserved.

Constitutional law

Under constitutional law
Constitutional law
Constitutional law is the body of law which defines the relationship of different entities within a state, namely, the executive, the legislature and the judiciary....

, particularly in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, constitutions give federal and provincial or state governments various powers. To go outside those powers would be ultra vires; for example, although the court did not use the term, in striking down a federal law in United States v. Lopez
United States v. Lopez
United States v. Alfonso Lopez, Jr., was the first United States Supreme Court case since the New Deal to set limits to Congress's power under the Commerce Clause of the United States Constitution.-Background:...

on the grounds that it exceeded the Constitutional authority of Congress, the Supreme Court effectively declared the law to be ultra vires.

According to Article 15.2 of the Irish constitution
Constitution of Ireland
The Constitution of Ireland is the fundamental law of the Irish state. The constitution falls broadly within the liberal democratic tradition. It establishes an independent state based on a system of representative democracy and guarantees certain fundamental rights, along with a popularly elected...

, the Oireachtas
Oireachtas
The Oireachtas , sometimes referred to as Oireachtas Éireann, is the "national parliament" or legislature of Ireland. The Oireachtas consists of:*The President of Ireland*The two Houses of the Oireachtas :**Dáil Éireann...

 (parliament) is the sole lawmaking body in the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

. In the case of CityView Press v AnCo however, the Irish Supreme Court held that the Oireachtas may delegate certain powers to subordinate bodies through primary legislation, so long as these delegated powers allow the delegatee only to further the principles and policies laid down by the Oireachtas in primary legislation and not craft new principles or policies themselves. Any piece of primary legislation which grants the power to make public policy to a body other than the Oireachtas is unconstitutional; however, as there is a presumption in Irish constitutional law that the Oireachtas acts within the confines of the Constitution, any legislation passed by the Oireachtas must be interpreted in such a way as to be constitutionally valid where possible. Thus, in a number of cases where bodies other than the Oireachtas were found to have used powers granted to them by primary legislation to make public policy, the impugned primary legislation was read in such a way that it would not have the effect of allowing a subordinate body to make public policy. In these cases, the primary legislation was held to be constitutional but the subordinate or secondary legislation, which amounted to creation of public policy, was held to be ultra vires the primary legislation and was therefore struck down.

In UK constitutional law, ultra vires describes patents, ordinances and the like enacted under the prerogative powers of the Crown that contradict statutes enacted by the King-in-Parliament. Almost unheard of in modern times, ultra vires acts by the Crown or its servants were previously a major threat to the rule of law
Rule of law
The rule of law, sometimes called supremacy of law, is a legal maxim that says that governmental decisions should be made by applying known principles or laws with minimal discretion in their application...

.

Boddington v British Transport Police is an example of an appeal heard by House of Lords which contested that a byelaw was beyond the powers conferred to it under section 67 of the Transport Act 1962.

Administrative law

In administrative law
Administrative law
Administrative law is the body of law that governs the activities of administrative agencies of government. Government agency action can include rulemaking, adjudication, or the enforcement of a specific regulatory agenda. Administrative law is considered a branch of public law...

, an act may be judicially reviewable
Judicial review
Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. Specific courts with judicial review power must annul the acts of the state when it finds them incompatible with a higher authority...

 for ultra vires in a narrow or broad sense. Narrow ultra vires applies if an administrator did not have the substantive power to make a decision or it was wrought with procedural defects. Broad ultra vires applies if there is an abuse of power (e.g., Wednesbury unreasonableness
Wednesbury unreasonableness
Associated Provincial Picture Houses v Wednesbury Corporation [1947] 1 KB 223 is an English law case which set down the standard of unreasonableness of public body decisions which render them liable to be quashed on judicial review...

 or bad faith) or a failure to exercise an administrative discretion (e.g., acting at the behest of another or unlawfully applying a government policy) or application of discretionary powers in irrational and wrong way. Either doctrine may entitle a claimant to various prerogative writs, equitable remedies or statutory orders if they are satisfied.

United Kingdom

In the seminal case of Anisminic v Foreign Compensation Commission
Anisminic v Foreign Compensation Commission
Anisminic is an important House of Lords decision in the area of administrative law, establishing in particular that any error of law made by a public body will make its decision a nullity and that a statutory exclusion clause does not deprive the courts from their jurisdiction in judicial review...

, Lord Reid is accredited with formulating the doctrine of ultra vires. However, ultra vires, together with unreasonableness, was mentioned much earlier by Lord Russell in the well known case, Kruse v Johnson, regarding challenging by-laws and other rules. Aninminic is better known for not depriving courts of their jurisdiction to declare a decision a nullity, even if a statute expressly prevents the decision being subject to judicial review. Further cases such as Bromley LBC v Greater London Council and Council of Civil Service Unions v Minister for the Civil Service
Council of Civil Service Unions v Minister for the Civil Service
Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, commonly known as the GCHQ case, was an English administrative law which held that the Royal Prerogative was subject to judicial review...

have sought to refine the doctrine.

In Hammersmith and Fulham London Borough Council v Hazell the House of Lords
Judicial functions of the House of Lords
The House of Lords, in addition to having a legislative function, historically also had a judicial function. It functioned as a court of first instance for the trials of peers, for impeachment cases, and as a court of last resort within the United Kingdom. In the latter case the House's...

 held that interest rate swap
Interest rate swap
An interest rate swap is a popular and highly liquid financial derivative instrument in which two parties agree to exchange interest rate cash flows, based on a specified notional amount from a fixed rate to a floating rate or from one floating rate to another...

s entered into by local authorities (a popular method of circumventing statutory restrictions on local authorities borrowing money at that time) were all ultra vires and void
Void (law)
In law, void means of no legal effect. An action, document or transaction which is void is of no legal effect whatsoever: an absolute nullity - the law treats it as if it had never existed or happened....

, sparking a raft of satellite litigation.

See also

  • Judicial activism
    Judicial activism
    Judicial activism describes judicial ruling suspected of being based on personal or political considerations rather than on existing law. It is sometimes used as an antonym of judicial restraint. The definition of judicial activism, and which specific decisions are activist, is a controversial...

  • Judicial Review in English Law
    Judicial review in English Law
    Judicial review is a procedure in English administrative law by which the courts in England and Wales supervise the exercise of public power on the application of an individual...

  • Mark Elliott (St. Catharine's College, Cambridge proposes the modified ultra vires doctrine for administrative law, placing it firmly in the correct constitutional setting. (The Ultra Vires Doctrine in a Constitutional Setting: Still the Central Principle of Administrative Law [1999] Cambridge Law Journal Vol. 58 129)
  • Precedent
    Precedent
    In common law legal systems, a precedent or authority is a principle or rule established in a legal case that a court or other judicial body may apply when deciding subsequent cases with similar issues or facts...

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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