Ultra Vires

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What is Ultra Vires?

Ultra Vires is a Latin phrase that literally means "beyond the power." The acts of a corporation are ultra vires when they are beyond the power or capacity of the corporation as granted by its Corporate Charter, the laws authorizing its formation, or similar founding documents.

Acts attempted by a corporation that are beyond the scope of its charter are void or voidable. Even though dicta supporting the view that ultra vires acts were totally void appeared in many cases, most courts actually adopted the view that such acts were voidable rather than void.

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. Within recent years, almost all business corporations are chartered to allow them to transact any lawful business.

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