Ultra Vires with an Emphasis on the Law in Georgia Research Paper

Ultra Vires with an Emphasis on the Law in Georgia - Research Paper Example Sometimes this term is used to signify the act of directors of a firm in which they exceed the power granted them. The cases of Ultra Vires, which include case of Rayfield v Hands, Ashbury Railway Carriage and Iron Company and Shuttleworth v Cox Brothers and Company drives attention towards the laws regarding ultra vires in many states, including Georgia, along with the conditions which decide whether an act is ultra vires or not. There are many cases registered under ultra vires. One of them is the case of Rayfield v Hands. Field-Davis Ltd. was a firm doing business as constructors. This company followed the Companies Act 1929 and had share capital of 4000 Euros. These 4000 Euros were further divided into shares of one Euro each out of which 2900 were issued (â€Å"DOCTRINE OF ULTRA VIRES-EFFECTS AND EXCEPTIONS"). Leslie Rayfield was the plaintiff (now called claimant) and had 725 shares as a shareholder in the company (â€Å"DOCTRINE OF ULTRA VIRES-EFFECTS AND EXCEPTIONS†). Moreover, Gordon Wyndham Hands, Alfred William Scales and Donald Davies were the defendants as well as the directors of the firm. According to the article 11 of the articles of the association of company, it was necessary that the directors of the company will take the shares at a fair value if the shareholder informs them regarding his transfer of shares in the company. To this, the defendants disagreed to take in and pay the fair price to the plaintiff. The claimant filed a complaint and later it was found that the articles were put together in such a way due to which directors were required to purchase the shares at a fair value (Cassidy, 2008). The objects of Ashbury Railway Carriage and Iron Company written in its Memorandum of Association were to only supply the material necessary for construction of railways and not to work on construction of them. However company entered into the contract of building railways. This was clearly in opposition with the provision of the Company Act of 1862(â€Å"DOCTRINE OF ULTRA VIRES-EFFECTS AND EXCEPTIONS†). Due to this contract, being against the Memorandum of Association was considered as ultra vires and not even the directors of the company could act against it even with their mutual consent. The shareholders could have passed a resolution to sanction the release or they could have changed the terms and conditions that were a part of company’s memorandum or articles. In the case of Shuttleworth v Cox Brothers and Company, it was decided that the contract decided on the basis of the articles present in the memorandum between the firm and the plaintiff could under goes change. If this new change is in the favor of the company then the contract will not be breached and this change will be considered as valid. Due to this, there was no doubt left that the alteration could be beneficial for the firm. Since there was dearth of evidence to prove the act of alteration of bad intentions, hence shareholders coul d not be questioned. Considering all this, the claimant was not granted the relief (â€Å"DOCTRINE OF ULTRA VIRES-EFFECTS AND EXCEPTIONS†). Georgia has its own laws when it comes to ultra vires. Rules and regulations that are posed on the firms working under Georgia’s laws are, 1. A corporation’