(4) Powers/Management of Corporation

What are a corporation's express powers?

The powers specifically granted in its articles of incorporation or bylaws.

What are a corporation's implied powers?

The power to perform all acts or transactions reasonably necessary to carry out its express powers or authorized business. :contentReference[oaicite:1]{index=1}

How are implied powers determined?

By whether the act is reasonably necessary to carry out the corporation's express powers or authorized business. :contentReference[oaicite:2]{index=2}

What is an ultra vires transaction?

A transaction that exceeds or is beyond the corporation's purposes or powers. :contentReference[oaicite:3]{index=3}

Why is an ultra vires transaction improper?

Because the corporation lacks the legal power to engage in the act. :contentReference[oaicite:4]{index=4}

Under the common law, could ultra vires be asserted as a defense to a contract?

Yes. :contentReference[oaicite:5]{index=5}

Under the common law, could ultra vires be asserted as a defense to a tort or crime?

No. :contentReference[oaicite:6]{index=6}

What is the modern trend regarding the ultra vires doctrine?

It is a defense of very limited viability because corporations are given broad implied powers. :contentReference[oaicite:7]{index=7}

May a corporation generally avoid its contractual obligations by claiming the contract was ultra vires under the modern rule?

No. :contentReference[oaicite:8]{index=8}

May a third party generally avoid a contract by arguing the corporation lacked capacity under the modern rule?

No. :contentReference[oaicite:9]{index=9}

Who may still challenge an ultra vires act under the modern rule?

Shareholders and the corporation. :contentReference[oaicite:10]{index=10}

What remedy may shareholders seek when the corporation proposes an ultra vires transaction?

An injunction preventing the corporation from entering into or continuing the unauthorized transaction. :contentReference[oaicite:11]{index=11}

Against whom may the corporation sue for an ultra vires transaction?

The directors and officers who authorized or carried out the unauthorized act. :contentReference[oaicite:12]{index=12}

What remedies may be imposed against directors or officers who authorize an ultra vires transaction?

They may be enjoined or held personally liable for damages under a warranty theory. :contentReference[oaicite:13]{index=13}

What exam fact should you look for when analyzing an ultra vires transaction?

Whether all shareholders unanimously ratified the unauthorized act. :contentReference[oaicite:14]{index=14}

What is the effect of unanimous shareholder ratification of an ultra vires act?

It may validate the otherwise unauthorized transaction. :contentReference[oaicite:15]{index=15}

Testable Issue: What is an ultra vires act?

A corporate act that exceeds the corporation's authorized purposes or powers. :contentReference[oaicite:16]{index=16}

Testable Issue: How has the modern rule changed the ultra vires doctrine?

Neither the corporation nor third parties generally may avoid contractual obligations by asserting lack of corporate capacity. :contentReference[oaicite:17]{index=17}

Testable Issue: Who may still challenge an ultra vires transaction under the modern rule?

Shareholders through injunction actions and the corporation through actions against directors or officers. :contentReference[oaicite:18]{index=18}

Testable Issue: What is the significance of unanimous shareholder ratification?

It may validate an otherwise unauthorized ultra vires transaction. :contentReference[oaicite:19]{index=19}

Essay Rule: How do you analyze an ultra vires issue?

Determine whether the transaction exceeded the corporation's express or implied powers, apply the modern rule limiting the ultra vires defense in contract actions, then analyze whether shareholders may seek an injunction, whether the corporation may recover against directors or officers, and whether unanimous shareholder ratification validates the transaction. :contentReference[oaicite:20]{index=20}

Master Synthesis: What is the framework for analyzing corporate powers and ultra vires acts?

First identify the corporation's express and implied powers, determine whether the challenged act exceeds those powers, recognize that modern law rarely permits avoidance of contractual obligations based on ultra vires, then evaluate the remaining remedies available to shareholders and the corporation and determine whether unanimous shareholder ratification cures the defect. :contentReference[oaicite:21]{index=21}