COMPANY LAW

(synopsis)

CONTRACTUAL CAPACITY OF THE COMPANY

AND AUTHORITY OF ITS AGENTS

Submitted to :
Ms. Shivani Rajesh
Asst. Professor,
CMR School of legal studies

Submitted by:
Vaishnav N.J
LLB.II year,
CMR school of legal studies.
INTRODUCTION

Contractual capacity' refers to a company's legal ability to engage in an agreement with

another party and be held liable to the terms of the contract. The ‘objects clause’ of a company is
the term used to express the company’s intentions and the purpose of its existence. A company
can have any legal activity listed in its objects document. If a company does not comply with its
objects clause, it is said to be contracting outside of its capacity and therefore acting ultra vires.
The ultra vires rule which states that a company has no capacity, expressly nor impliedly, to
enter a contract that has not been provided for in the company’s objects clause, was coupled with
the principle that individuals are presumed to be aware of the company’s public documents,
referred to as the doctrine of constructive notice. Due to the separate legal entity status, the
corporation has the legal capacity and powers of an individual, including the ability to enter into
contracts on its own behalf. One way the company can exercise its legal capacity is through an
agent to whom it grants authority.

SYNOPSIS

STATEMENT OF PROBLEM

This study will include understanding the contractual capacity of the company, Doctrine of ultra
vires and doctrine of constructive notice and the authority of the agents of the company and few case laws
that will provide better understanding of the contractual capacity of the company.

RESEARCH QUESTIONS

 When does a company acquire the capacity to contract ?

 How law has been changed when the company acts beyond its capacity ?
 Who lacks the capacity to contract ?
 How authority of agent effect the contractual capacity of the company ?

HYPOTHESIS

Contractual capacity' refers to a company's legal ability to engage in an agreement with another

party and be held liable to the terms of the contract. The ultra vires rule which states that a company has
no capacity, expressly nor impliedly, to enter a contract that has not been provided in the company. This
research is drafted in a manner that research question how law has been changed when the company acts
beyond its capacity? and Who lacks the capacity to contract, this is where that the company can exercise
its legal capacity is through an agent to whom it grants authority.

OBJECTIVES

 To understand the contractual capacity of the company

 To analyse the doctrine of ultra-vires and doctrine of constructive notice
 To understand the authority of agents of the company
SCOPE OF STUDY

Scope of this study is limited to contractual capacity of the company and authority of its agent which also
include the contract act for the comparison where this project did not give the detail study about the
contractual capacity under Contract Act.

TENTATIVE CHAPTERIZATION:

Chapter 1:

Introduction: A brief introduction of the concept of contractual capacity of the company and authority of
its agents.

Chapter 2:

Explanation: This chapter deals with the explanation of Doctrine of Ultravires and Doctrine of
Constructive Notice.

Chapter 3:

Comparison: This chapter analyses and compares the Companies Act and Contract Act.

Chapter 4:

Case study: This chapter tries to study the cases which are related to the current topic and helps in
concluding the case.