"If I thought it was at common law an incident to a corporation that its capacity should be limited by the instrument creating it, I should agree that the capacity of a company incorporated under the act of 1862 was limited to the object in the memorandum of association. But if I am right in the opinion which I have already expressed, that the general power of contracting is an incident to a corporation which it requires an indication of intention in the legislature to take away, I see no such indication here. If the question was whether the legislature had conferred on a corporation, created under this act, capacity to enter into contracts beyond the provisions of the deed, there could be only one answer. The legislature did not confer such capacity. But if the question be, as I apprehend it is, whether the legislature have indicated an intention to take away the power of contracting which at common law would be incident to a body corporate, and not merely to limit the authority of the managing body and the majority of the share-holders to bind the minority, but also to prohibit and make illegal contracts made by the body corporate, in such a manner that they would be binding on the body if incorporated at common law, I think the answer should be the other way."
On the other hand, the House of Lords, 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 was the intention of the legislature, not implied, but actually expressed, that the corporations, should not enter, having regard to this memorandum of association, into a contract of this description. The contract in my judgment could not have been ratified by the unanimous assent of the whole corporation." In such companies, therefore, objects beyond the scope of the memorandum of association are _ultra vires_ of the corporation. The doctrine of _ultra vires_, as it is called, is almost wholly of modern and judicial creation. The first emphatic recognition of it appears to have been in the case of companies created for special purposes with extraordinary powers, by act of parliament, and, more particularly, railway companies. The funds of such companies, it was held, must be applied to the purposes for which they were created, and to no other. Whether this doctrine is applicable to the older or, as they are sometimes called, ordinary corporations, appears to be doubtful. S. Brice (_Ultra Vires_) writes:--