''Ashbury Railway Carriage and Iron Co Ltd v Riche'' (1875) LR 7 HL 653 is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...

case, which concerned the objects clause of a company's memorandum of association. Its importance as case law has been diminished as a result of the

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largely ...

s 31, which allows for unlimited objects for which a company may be carried on. Furthermore, any limits a company does have in its objects clause have no effect whatsoever for people outside a company (s 39 CA 2006), except as a general issue of authority of the company's agents.

Facts

Incorporated under the

Companies Act 1862 The Companies Act 1862 (25 & 26 Vict. c.89) was an Act of the Parliament of the United Kingdom regulating UK company law, whose descendant is the Companies Act 2006. Provisions *s 6 'Any seven or more persons associated for any lawful purpose may ...

, the Ashbury Railway Carriage and Iron Company Ltd’s memorandum, clause 3, stated that its objects were "to make and sell, or lend on hire, railway-carriages…" and clause 4 stated that activities beyond this needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway from Antwerp to Tournai in Belgium.Yadaf, H. R., (2012)
Doctrine of Ultra Vires under Companies Act 1956
Chapter 7, accessed 16 September 2018 Later, the company repudiated the agreement. Riche sued, and the company pleaded that the action was ''

ultra vires ('beyond the powers') is a Latin phrase used in law to describe an act which requires legal authority but is done without it. Its opposite, an act done under proper authority, is ('within the powers'). Acts that are may equivalently be termed ...

''.

Judgment

Exchequer Court

The judges of the

exchequer In the civil service of the United Kingdom, His Majesty’s Exchequer, or just the Exchequer, is the accounting process of central government and the government's '' current account'' (i.e., money held from taxation and other government revenu ...

chamber being equally divided, the decision of the court below was affirmed. Blackburn J said:

House of Lords

The

House of Lords The House of Lords, also known as the House of Peers, is the upper house of the Parliament of the United Kingdom. Membership is by appointment, heredity or official function. Like the House of Commons, it meets in the Palace of Westminste ...

, agreeing with the three dissentient judges in the Exchequer Chamber, pronounced the effect of the Companies Act to be the opposite of that indicated by Mr Justice Blackburn. It held that if a company pursues objects beyond the scope of the memorandum of association, the company's actions are ''

'' and void. Lord Cairns LC said,

References

{{reflist United Kingdom company case law Lord Blackburn cases 1875 in case law 1875 in British law House of Lords cases Railway litigation in 1875