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Ultra vires is a Latin term which means “beyond the powers,” and when used in law, it refers to an activity which exceeds the powers granted to the person engaging in that activity. Committing activities which exceed one's powers can be illegal, and may be subject to various legal remedies depending on the nature of the situation. By contrast, acts committed “intra vires” are acts which were appropriate, given the powers granted to the actor.
One sense in which this term may be used is in reference to the activities of corporations. Corporations are granted certain powers under the law and in their charters. If they exceed these powers in an activity considered to be ultra vires, they can be subject to legal penalties. For example, if a company starts to sell insurance and it is not chartered as an insurance company, the government can bring suit under the argument that the company is exceeding the powers granted to it by law.
Governments can bring suits in these situations and so can people like shareholders. For example, if a corporation engages in a merger against the wishes of its shareholders and without consulting them, they may sue on the grounds that this in an ultra vires action which the company was not allowed to take. A variety of other activities may exceed the charters and legal mandates which govern the activities of corporations.
This legal term can also refer to situations in courts. If a court or judge oversteps the powers assigned by law, this can be challenged. This may be done so after the fact or preemptively if there is reason to believe that a pending action in court exceeds the powers of that court. Likewise, sometimes laws are challenged because they are believed to be ultra vires and high courts may rule that the legislature cannot make certain laws because they exceed the powers granted to the legislature.
Suits on the grounds of ultra vires have varying degrees of success, depending on the nature of the suit and the region in which the suit is being heard. The courts take delineation of powers very seriously and will step in if they feel that a situation shows a clear overstepping of boundaries, but sometimes the facts of a case are not so simple. In these instances, persuasive arguments may be needed from the parties trying to argue that an action exceeded the law.
I believe that ultra vires in courts is often referred to as "abuse of power by courts."
I think that this term, ultra vires, has far greater importance than we realize. My view is that it was established to put a check and balances on local, state and federal government powers.
A higher court, for example, can determine that a lower court's decision is ultra vires and invalid. But the same applies to the highest court in the U.S.- the Supreme Court. The Supreme Court has very specific powers as well and it can also make decisions that are ultra vires.
I think ultra vires all comes down to making sure that each institution in the US- whether it is local, state or federal- keeps within boundaries and only practices the powers that it has been given.
This is another reason that makes me proud of the system we have.
@anamur-- I agree with you about this causing unfair competition. It should not be allowed. But what happens to other companies that worked with that firm not knowing that they were practicing ultra vires?
What if a company makes a deal or agreement with another company and receives payments and loans that are considered to be ultra vires? Can the company that made the payment able to go to court to reclaim those funds?
If other companies that worked with them are being indirectly punished for that company's wrong practices, that would be bad. If they didn't know about it, I think they should be rewarded their financial costs. If they knew about it and still worked with them, of course that would be a whole other situation. They shouldn't be rewarded in that case.
What do you think?
I think that ultra vires are a great way to prevent illegal competition among firms in an industry.
Just like with the example in the article, if a company is doing something that is not part of its services, it is also a new competitor in that new industry. But it is not liable to the rules, regulations and fees that other firms in that industry are liable to. This is unjust to those firms who are doing everything right by law.
The company that is engaging in ultra vires is making illegal profit and basically stealing the profit of the other firms.
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