Answer the following: a. What powers does a corporation normally possess? b. What is the doctrine of ultra vires? What is the effect of an ultra vires contract?
a. A corporation possesses only the powers that the state confers on it. Typical general powers granted by incorporation statutes include the following: 1. perpetual succession; 2. to sue and be sued in its corporate name; 3. to have a corporate seal; 4. to make and amend bylaws; 5. to acquire and dispose of property; 6. to own, vote, and dispose of shares in other entities; 7. to make contracts, borrow money, and secure its obligations; 8. to lend money; 9. to be a partner in a partnership; 10. to conduct its business in the state of incorporation and other states; 11. to elect directors and appoint officers, employees, and agents; 12. to establish pension, profit sharing, and other plans; and (13 ) to make charitable donations. The Revised Act makes a general grant of power to all corporations to do all things necessary or convenient to carry out its business and affairs.
b. Ultra vires acts are without legal authorization, because the acts are not within the scope and type of acts that the corporation is legally empowered to perform. Traditionally, ultra vires acts were unenforceable as null and void. Courts now usually allow the ultra vires defense if the contract is wholly executory on both sides. Most corporate statutes today give corporations broad powers and most corporate charters use general language to outline the activities in which the corporation proposes to engage, so the doctrine of ultra vires is not as significant today as it was in the past.
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