LAW 122 Chapter Notes - Chapter 10: Ultra Vires, Consumer Protection, Undue Influence
27 Feb 2015
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If so, their contracts are voidable, just as in the case of a minor. They can avoid the agreement within a reasonable time of becoming competent: there is a difference between mental incapacity and minority. A minor"s contract is voidable even if the other party was unaware of the age issue. Chartered corporations are treated the same as individuals who have reached the age of majority. If a chartered corporation enters into contracts in breach of its charter, its charter may be forfeited, but the contracts made in breach of the corporate charter will still be binding. If a statutory corporation attempts to contract in a manner that exceeds its statutory powers, it acts ultra vires. When a corporation acts ultra vires, it lacks the capacity to contract. Associations are usually unincorporated business organizations that lack contractual capacity. Although they share some features with corporations, most associations do not enjoy independent legal existence and are thus incapable of contracting.
