"Doctrine of Ultra Vires" is related to :

Question

Accepted Answer

The correct option is 3:
The Doctrine of Ultra Vires, a Latin phrase meaning "beyond the powers," is a fundamental principle of corporate law that dictates the limits of a company's legal authority. This doctrine is intrinsically linked to The Companies Act, 2013, as a company's powers are primarily defined by its Memorandum of Association, particularly the Objects Clause, which must comply with the provisions of the Act. Any transaction or act undertaken by the company that falls outside the defined objects and powers is deemed *ultra vires* and consequently, is void *ab initio* (void from the beginning). The doctrine serves as a protective measure for the investors and creditors, ensuring that the company's funds are used only for the purposes stated in its charter, thereby directly governing the scope of activities for companies registered under The Companies Act.

The incorrect option is 1:
The Sale of Goods Act, 1930 is incorrect because it is a special law that governs the contracts relating to the sale of movable property, defining the rights and duties of sellers and buyers. This Act primarily deals with concepts like 'condition,' 'warranty,' 'transfer of property,' and 'unpaid seller's rights,' focusing on the specific commercial transaction rather than the legal existence or constitutional capacity of the contracting parties. The doctrine of Ultra Vires concerns the foundational powers of a corporation, a subject outside the scope of goods transactions.

The incorrect option is 2:
The Indian Contract Act, 1872, is the general law of the land for all contracts and outlines the essential elements of a valid agreement. While a contract that is *ultra vires* a company is void under the Companies Act, the doctrine itself is a restriction on the corporate personality, not a general principle of contract law. The Contract Act addresses the *general* capacity to contract, but the specific *statutory incapacity* of a company due to an Ultra Vires act is governed by its parent legislation, The Companies Act.

The incorrect option is 4:
The Factories Act, 1948 is incorrect as it is specialized social legislation designed to regulate the working conditions, health, safety, and welfare of workers employed in factories. The Act establishes rules for working hours, hygiene, and protective measures, which are operational and labor-related matters. It has absolutely no legal or conceptual connection with the doctrine of Ultra Vires, which pertains to the foundational powers, objects, and legal capacity of a corporate body.