# Doctrine of Ultra Vires
## Meaning
'Ultra vires' literally means 'beyond the powers of'. Anything outside the objects and powers stated in the object clause of the Memorandum is ultra vires the company and is therefore null and void.
The doctrine traces back to Ashbury Railway Carriage & Iron Co. Ltd v Riche (1875), where the House of Lords held that a contract beyond the objects clause was void ab initio and could not be ratified even by the unanimous assent of all shareholders.
## Consequences of an Ultra Vires (the Company) act
1. The act is a nullity — it produces no legal effect.
2. It cannot be ratified, even by the unanimous consent of all shareholders.
3. No rights or liabilities accrue to the company from such a transaction.
4. Neither the company nor the other contracting party can sue on it.
5. The act does not bind the company at all.
## The four-tier ladder of 'ultra vires'
Not every transgression has the same consequence. The Act and case-law recognise a hierarchy:
| Level breached | Within MOA? | Within AOA? | Within Directors' powers? | Status & cure |
|---|---|---|---|---|
| Ultra vires the Memorandum | NO | — | — | VOID — cannot be ratified at all |
| Ultra vires the Articles but intra vires the MOA | YES | NO | — | Can be ratified by altering the AOA by Special Resolution |
| Ultra vires the Directors but intra vires both MOA & AOA | YES | YES | NO | Can be ratified by members in general meeting (ordinary resolution unless higher specified) |
| Intra vires at every level | YES | YES | YES | Valid and binding |
## Why the doctrine matters
- It protects shareholders — their capital is used only for declared objects.
- It protects creditors — they know the universe of risks the company can undertake.
- It enforces fidelity to the company's charter.
## A common pitfall to avoid
Do not conflate 'ultra vires the company' with 'illegal'. An act may be perfectly legal in itself (e.g., investing in real estate) yet ultra vires a specific company whose MOA does not authorise it.