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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.
maurice.mutuku answered the question on May 3, 2018 at 05:45
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