The term Ultra Vires is derived from two words i.e. ‘Ultra’ is beyond and ‘Vires’ is power, which means beyond the power. It is an any act done by the company which does not fall under the object clause of the Company is an act done ultra vires. The said act is ‘Void’ and the same cannot be ratified by the Company.
The history of this doctrine can be traced back to as early as 1878. The origin of this doctrine is said to take place in the Case of Ashbury Railway Carriage & Iron Co. Ltd. Vs Riche (L.R. 7 H.L. 653).
The matter was taken up in the House of Lords whereby the agreement reached between the parties was deemed to be ultra vires to the company’s statement and therefore it remained null and void. It was also stated that the MOA cannot be corrected by antecedent effect and no Ultra vires Act can be recognized at a later stage.
For the common man, the act of ‘ultra vires’ and the act of illegality are one and the same. Both of these terms have been synonymous and interchangeable on various occasions. However, things like ‘ultra vires’ and ‘illegal’ are not the same and have their own differences.
The Ultra Vires Act is something that goes beyond the company’s object clauses, scope and ambitions, and something not described in the company’s MOA. Such action may or may not be invalid. Unlawful act, on the other hand, is something that is clearly said to be in violation of land law, it is a crime and removes punitive provisions with civil liability and / or is clearly prohibited by law.
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