i. Did Mr. Sam have the authority to accept the cheque? Why? ii. Can Mr. Sam’s action be called as Ultra-Vires? Why?

Monjur Alahi

Study the following case and express your opinion:

Mr. A entered into a contract with Star Limited Company and as advance payment gave a cheque of ₹ 1 lac to a Director Mr. Sam. Mr. Sam is not the Managing Director. Articles state that only the MD is authorized to sign any contracts or receive any payments on behalf of the company.

i. Did Mr. Sam have the authority to accept the cheque? Why?

ii. Can Mr. Sam’s action be called as Ultra-Vires? Why?


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Salim Ahmed Kawsar

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i. Sam did not have the authority to accept the cheque because usually, individual directors do not have the authority to act on the company’s behaviour unless expressly authorized.

ii. Mr. Sam’s action cannot be called ultra-vires because any act done by him beyond the powers of the memorandum is called UltraVires.

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