Ultra vires is a Latin term meaning "beyond powers". The term is usually used to refer to acts taken by a corporation or officers of a corporation that are taken outside of the powers or authority granted to them by law or under the corporate charter. Some states have enacted laws to prevent the use of the defense of ultra vires action to unfairly avoid obligations under otherwise valid contracts.
The concept of acting "under color of law" means acts are done while a person acts or purports to act in the performance of official duties under any state, county, or municipal law, ordinance, or regulation. This is a similar concept that refers to the apparently authorized status of the action, as distinguished from the unauthorized status of their actions, which ultra vires refers to.
The following is an example of a state statute dealing with the concept of ultra vires:
- "Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
- In a proceeding by a shareholder against the corporation to enjoin the act;
- In a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
- In a proceeding by the Attorney General under Section 10-2B-14.30.
- In a shareholder's proceeding under subsection (b)(1) to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act."
A corporation's power to act may be challenged: