INSTITUTIONAL INCAPACITY

The question of incapacity has been particularly important in the context of companies which have entered into transactions which they do not have capacity to make. Such ultra vires transactions are null and void.^[1] In a number of cases the courts have had to consider whether the fact that the defendant company was incapacitated constituted a bar to a restitutionary claim. Although this is no longer a relevant question, because by virtue of section 39(1) of the Companies Act 2006 the claimant can enforce a transaction which is beyond the capacity of the company, the old cases remain relevant since they assist in determining what the position of the common law is as to the defence of incapacity generally. Also the question of incapacity remains highly relevant in respect of other institutions which remain subject to the ultra vires doctrine, most notably public authorities.^{[2] [3] [4]}

• [1] Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653.
• [2] See, in particular, Woolwich Equitable Building Society v IRC [1993] AC 70 and the litigation arising frominterest rate swaps transactions.
• [3] (1862) 2 J and H 441, 70 ER 1131. See also Flood v Irish Provident Assurance Co (1912) 46 ILT 214.
• [4] [2002] EWHC 1760 (Comm); [2003] 1 All ER (Comm) 246.