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hello sir
can u please explain in a simple language what is ultra vires ,internal and external ultra vires???im having trouble understanding these!!!
thank you sirultra = beyond
vires = powers
ultra vires = beyond the powers
a director who acts ultra vires is acting beyond his / her powers
a company that is put into a contract that lies beyond its permissable activities according to its constitution is said to be in an ultra vires contract
OK?
and what is the consequenses of a director who acts beyong his powers is? the contract is void,right?
anyway thank u very much
No, the contract is valid – the director has ostensible / apparent authority to bind the company in contract. An innocent third party acting in good faith is able to hold the company liable. Only where the third party KNOWS that the director is acting beyond his / her powers will the company be able to avoid liability and then the director is personally liable.
However, if the company knows that the director is acting beyond his / her powers and allows this situation to continue, the company will be unable to deny (they will be estopped from denying) that the director had the authority to act
OK?
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