7.2 Modern position

As from 4 February 1991, the doctrine of ultra vires1, in so far as it affected third parties transacting with companies, was effectively abolished. The position is now that the validity of an act done by a company cannot be called into question on the ground of lack of capacity by reason of anything in the company’s consititution2. Further, in favour of a person dealing3 with a company in good faith, the power of the directors to bind the company, or authorise others to do so, is deemed to be free

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