Doctrine Of Ultra Vires Case Law

Ltd entered into a contract with mr riche for providing finance for the construction of railway line in belgium.

Doctrine of ultra vires case law. To apply the doctrine of ultra vires the first question for the courts to decide is whether the provision in the act prescribing the procedure is mandatory or directory. An action of the authority is intra vires when it falls within the limits of the power conferred on it but ultra vires if it goes outside this limit. It states that the objects of a company as specified in its memorandum of association can be departed from only to the extent permitted by the act. This doctrine can be considered as the central principle in the whole of administrative law.

This known as doctrine of ultra vires. In the case of ashbury railway carriage and iron company v s riche 1875 l r 7 h l 653 the doctrine of ultra vires had been established. The doctrine envisages that an authority can exercise only so much power as is conferred on it by law. The doctrine of ultra vires is produced by the constitutional principles of the rule of law the sovereignty of parliament and the independence of the judiciary.

This doctrine got its roots firm in 1875 in case of ashbury railway carriage and iron company ltd. The details of the case is as under. The doctrine of ultra vires however has its genesis in the english case of ashbury railway carriage and iron company ltd vs riche. Thus the expression ultra vires means an act beyond the powers.

The doctrine of ultra vires is the basic doctrine in administrative law. This was the landmark decision. Types of ultra vires acts. Section associated with the doctrine of ultra vires of the companies act is section 20 1 20 2 a b c and 20 3.

There are three types of ultra vires acts which. In this case the directors of the company i e ashbury railway carriage iron co. However ultra vires together with unreasonableness was mentioned much earlier by lord russell in the well known case kruse v johnson 13 regarding challenging by laws and other rules. An ultra vires act is void and cannot ratified even by majority of shareholders.

Section 20 1 provides no action prosecuted as an act of shall be invalid by reason only the fact that the company does not have the ability or authority to act. Doctrine of ultra vires. The ultra vires doctrine is a kind of insurance policy that reassures a company s shareholders and creditors that the company will not use their assets or funds for any purposes other than those that are afforded to it and specified within the ultra vires doctrine. The doctrine of ultra vires is a fundamental rule of company law.

Ultra vires doctrine in the companies act 1965. Facts of the case.