One. Like all risks, the risk of an ultra vires effect can be minimized, but probably not completely eliminated. A fundamental guiding principle is that municipalities have only the powers conferred on them by the legislature. Girard v. Allenstown, 121 N.H. 268 (1981). Public servants should always keep in mind that anything that seems reasonable and beneficial will not necessarily be approved. A second general principle states that municipal powers can only be exercised by designated officers and only if they have followed prescribed procedures. This requires continuous planning and attention to detail.
This is important both to protect the validity of the municipality`s actions and to protect public servants from personal liability. Another issue of ultra vires contracts is property taxes. There are several New Hampshire Supreme Court cases invalidating contracts that are supposed to grant property tax exemptions. For example, in Piper v. Meredith, 83 N.H. 107 (1927), the city`s contract to exempt the plaintiff from tax in exchange for improvements was declared null and void. Under constitutional law, particularly in Canada and the United States, constitutions confer various powers on federal, provincial or state governments. To go beyond these powers would be ultra vires; For example, although the Court did not use this term to amend a federal statute in United States v.
Lopez on the grounds that it exceeded the constitutional authority of Congress, the Supreme Court still declared the law ultra vires. [10] Local officials involved in litigation or threat of litigation are sometimes accused of ultra vires by the municipality or its officials. «Ultra vires» has nothing to do with sunburn or the flu, but it`s an important legal concept that officials need to understand. In certain circumstances, the municipal action may be rescinded because it is ultra vires. In other cases, the fact that an act is ultra vires may be a defence to municipal liability. In British constitutional law, ultra vires describes patents, ordinances and other similar patents granted under the prerogatives of the Crown and contrary to laws passed by the Crown in Parliament. Almost unknown in modern times, the ultra vires acts of the crown or its servants posed a major threat to the rule of law. Several modern developments related to business start-ups have limited the likelihood of ultra vires actions.
Except in the case of not-for-profit corporations (including municipal corporations), this legal doctrine is obsolete; In recent years, almost all businesses have been created to enable them to conduct legitimate activities. The U.S. Model Business Corporation Act states: «The validity of corporate actions shall not be challenged on the basis that the corporation is unable or incapable of acting.» The doctrine still has some life among non-profit organizations or state-created corporations established for a specific public purpose, such as universities or charities. Companies have a variety of legal documents and policies that outline the parameters of actions allowed by each organization, its employees, and its directors. These documents may contain «statutes». The memorandum is mainly used in Europe, but not in the United States. In the landmark case of Anisminic v. Foreign Compensation Commission,[12] Lord Reid is accredited to formulate the ultra vires doctrine.
However, ultra vires, as well as impropriety, were mentioned much earlier by Lord Russell in the famous Kruse v Johnson case,[13] which involved challenging laws and other rules. Anisminic is best known for not depriving the courts of their jurisdiction to overturn a decision, even though a law expressly prohibits the decision from being subject to judicial review. Other cases such as Bromley LBC v. Greater London Council[14] and Council of Civil Service Unions v. Minister of the Civil Service[15] have tried to refine the doctrine. However, if a lender lends money to a business that has not yet been extended, it can prevent the separation of the company by means of an injunction. The lender has this right because the company does not become the owner of the money, since it is ultra vires for the business and the lender remains the owner. The ultra vires doctrine is a fundamental rule of company law. It clarifies that the objectives of a corporation, as set out in its articles of association, may be set aside only to the extent permitted by law.
Therefore, if the Company performs an act or enters into a contract that does not fall within the powers of the directors and/or the Company itself, that act/contract will be invalid and will not legally bind the Company. Sometimes an ultra vires stock can be regulated by the company`s shareholders. For example, the main advantage of the ultra vires doctrine is the protection of shareholders and creditors, but it also has disadvantages.
