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DOCTRINE OF ULTRAVIRES In the case of a company objects or powers which is not stated in the memorandum is prohibited by the doctrine of ultra vires. As a result, an act which is ultra vires is void and it shall not bind the company. Neither the company nor the party to the contract can su
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FAQ :
The doctrine of Ultravires prohibits a company from undertaking acts not stated in its memorandum. Such acts are considered void and do not bind the company, nor can they be ratified even with unanimous member assent, unless they are ultra vires the directors only or the articles of association can be properly altered.
Constructive Notice assumes that anyone dealing with a company has inspected its public documents, like the Memorandum and Articles of Association, and is aware of their contents. If they fail to do so, the law presumes they have this knowledge.
If a contract is ultra vires (beyond the company's powers), it is void and cannot bind the company. Neither the company nor the other party can sue on it, and the company cannot acquire rights against its property based on such a contract.
The doctrine of Indoor Management is contrary to Constructive Notice. It assumes outsiders are unaware of a company's internal affairs and can rely on authorised acts appearing to comply with internal formalities, whereas Constructive Notice presumes outsiders know the company's documented powers.
The doctrine of Indoor Management protects outsiders who deal with a company. They can assume that internal procedures have been followed if an act is authorised by the company's Memorandum or Articles of Association, and they are not liable for internal irregularities.
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