Ultra vires refers to activities that exceed the powers granted to a person or company by law, which may result in legal penalties. Governments and individuals can sue companies for ultra vires actions, and courts and laws can also be challenged as exceeding their powers. Success of lawsuits depends on the nature of the case and region.
Ultra vires is a Latin term meaning “beyond powers” and when used in law refers to an activity that exceeds the powers granted to the person who engages in such activity. Committing activities that exceed one’s powers may be illegal and may be subject to various legal remedies depending on the nature of the situation. Conversely, acts committed “intra vires” are acts that were appropriate, given the powers granted to the actor.
One sense in which this term can be used is to refer to the activities of companies. Corporations are granted certain powers under the law and in their statutes. If they exceed these powers in an activity considered ultra vires, they may be subject to legal penalties. For example, if a company starts selling insurance and is not incorporated as an insurance company, the government can file a lawsuit claiming that the company is exceeding the powers granted to it by law.
Governments can bring lawsuits in these situations, as can individuals such as shareholders. For example, if a company engages in a merger against the wishes of its shareholders and without consulting them, they can sue on the grounds that this is an ultra vires action that the company was not authorized to take. A variety of other activities may exceed the statutes and legal mandates that govern the companies’ activities.
This legal term can also refer to situations in the courts. If a court or judge exceeds the powers assigned by law, this can be challenged. This may be done retrospectively or preemptively if there is reason to believe that an action pending in court exceeds the powers of that court. Similarly, laws are sometimes challenged as being held ultra vires, and high courts may rule that the legislature cannot make certain laws because they exceed the powers granted to the legislature.
Ultra vires lawsuits have varying degrees of success, depending on the nature of the lawsuit and the region in which the lawsuit is heard. Courts take the definition of powers very seriously and will intervene if they feel a situation shows clear boundary overshooting, but sometimes the facts of a case aren’t that simple. In these cases, persuasive arguments may be needed by the parties seeking to argue that an action passed the law.
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