Discuss the contractual capacity of: Corporations

The contractual capacity of artificial persons is determined by law. In the case of statutory corporations, contractual capacity is conferred by statute. It can only enter the transactions stipulated by the statute and those that are reasonably incidental thereto.
The contractual capacity of registered companies is determined by the objects clause of the memorandum. At common law a registered company can only enter into transactions set forth in its objects and those that are reasonably incidental to the attainment or pursuit of those objects. Other transactions are ultra vires and therefore null and void. It was so held in Ashbury Railway Carriage Ltd V. Riche. In Attorney General V. Great Eastern Railway (1880) it was held that in addition to the express objects, a company had capacity to enter into transactions reasonably incidental to the attainment or pursuit of those objects. An ultra wires transaction is not capable of being ratified.



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