Ultra Vires in United States

Ultra Vires Definition

(Lat.) The modem technical designation, in the law of corporations, of acts beyond the scope of their powers, as defined by their charters or acts of incorporation; as distinguished from acts which are authorized. It was early contended (according to the definition of Ultra Vires based on the Cyclopedic Law Dictionary; this definition may need to be proofread) that a corporation could not exceed its powers; that the acts of its agents beyond the charter powers of the corporation were not the acts of the corporation; but it is now well settled that corporations, like natural persons, have power and capacity to do wrong. They may, in their dealings and contracts, break over the liability imposed upon them by their charters, and when they do so, their exemption from liability cannot be claimed on the mere ground that they have no attributes or faculties which render it possible for them to thus act. 119 Ind. 324.

The act need not necessarily be expressly prohibited by the charter or by statute. Nor need it be in any sense immoral or injurious to others. It may be an act which could be lawfully done by a natural personl It may be even praiseworthy, as in the case of a gift by a corporation for charitable or religious purpose. Yet, if it is not authorized by the charter of the corporation, or is not an implied or incidental power, it is ultra vires. 3 Fletcher Cyclopedia Corporations, 2571. There is much conflict in the cases as to the validity of an ultra vires contract. In some states, it is held that, if the corporation had no authority to make the contract, it is void, but if it was within the general scope of the corporate power, and the want of power in that case was because of particular facts, it is valid (43 Wis. 420; 8 Ohio 257); while in several states it is held that the plea of ultra vires should not prevail, whether it is imposed for or against the corporation, when it would not advance justice, but, on the contrary, would accomplish a legal wrong. Read more about the meaning of Ultra Vires in the legal Dictionaries

Practical Information

Note: Some of this information was last updated in 1982

Without power; beyond the powers of. A term used to apply to a contract or act beyond the powers of a corporation (in U.S. law) as expressed or implied in its certificate (in U.S. law) of Incorporation or by statute. For example, if a corporation contracts a debt in excess of the maximum allowed by statute, the contract (in U.S. law) is ultra vires beyond the power of the corporation. If neither party to the contract has performed, either the corporation or the other party may declare the contract void. After both parties have performed, the courts will not rescind the contract; the weight of authority is to the effect that after one party has performed the other party cannot repudiate the contract by claiming that it was ultra vires. Directors may be held personally liable for loss to the corporation occasioned by an ultra vires act. An ultra vires contract made by a municipal corporation is not binding upon the municipality, although the other has performed.

(Revised by Ann De Vries)

What is Ultra Vires?

For a meaning of it, read Ultra Vires in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Ultra Vires.

Ultra Vires Case

by Thomas Libby

On May 11, 1880, Walter J. Crow killed five people in a gunfight at Mussel Slough in Tulare County (California). What became known as the Mussel Slough Tragedy encouraged anti-railroad sentiment and President Theodore Roosevelt’s eventual promotion of antitrust legislation.

The trouble traces back to the federal government’s grant of 25,000 acres to Southern Pacific for railroad development in 1866. The company then encouraged settlers to work the land, implying that they could purchase it later for about $2.50 an acre. When the railroad eventually offered the parcels for sale at up to $35 per acre, the settlers cried foul and headed to court. Late in 1879, Southern Pacific prevailed in litigation presided over by Ninth Circuit Judge Lorenzo Sawyer – who owned shares of Southern Pacific and was beholden for much of his career to Southern Pacific President (and former Governor) Leland Stanford. In Southern Pac. R. Co. v. Orton (32 F. 457), Judge Sawyer ruled that states could not control the ultra vires acts of corporations.

The following spring, at a picnic to rally support for the settlers, gunfire broke out. Gunslingers as notorious as Wyatt Earp, Jesse James, Billy the Kid, and Wild Bill Hickok never killed as many men at one time as did Crow – a railroad sympathizer who himself was murdered by “parties unknown” later that evening.

Ultra Vires and the United States Constitution

According to the Encyclopedia of the American Constitution, about its article titled ULTRA VIRES, this latin concept means “Beyond powers”, and this term applies either to acts taken by a corporation beyond the limits of its chartered (legally authorized) powers or to acts of a public official beyond his or her delegated authority.

Ultra Vires in Foreign Legal Encyclopedias

For starting research in the law of a foreign country:

Link	Description
Ultra Vires	Ultra Vires in the World Legal Encyclopedia.
Ultra Vires	Ultra Vires in the European Legal Encyclopedia.
Ultra Vires	Ultra Vires in the Asian Legal Encyclopedia.
Ultra Vires	Ultra Vires in the UK Legal Encyclopedia.
Ultra Vires	Ultra Vires in the Australian Legal Encyclopedia.

Ultra Vires and Corporate Law

This section provides basic coverage of Ultra Vires in relation to U.S. state and federal corporate law. For comprehensive coverage, please visit the main entry.

Ultra Vires