Ashbury Rly Carriage and Iron Co Ltd v Riche

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Ashbury Railway Carriage and Iron Co. Ltd v Riche
Royal Coat of Arms of the United Kingdom.svg
Court House of Lords
Citation(s) (1875) LR 7 HL 653
Case history
Prior action(s) (1875) LR 9 Ex 224
Keywords
companies, objects clause, corporate capacity, ultra vires

Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653 is a UK company law case, which concerned the objects clause of a company.

Its importance has been diminished as a result of the Companies Act 2006 s 31, which allows for unlimited objects for which a company may be run. Furthermore, any limits a company does have in its objects clause has 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[edit]

Incorporated under the Companies Act 1862, the Ashbury Railway Carriage and Iron Company Ltd’s memorandum, clause 3, said its objects were "to make and sell, or lend on hire, railway-carriages…" and clause 4 said activities beyond needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway in Belgium. Later, the company refused the agreement. Riche sued, and the company pleaded the action was ultra vires.

Judgment[edit]

Exchequer Court[edit]

The judges of the exchequer chamber being equally divided, the decision of the court below was affirmed.

Blackburn J said,

House of Lords[edit]

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 held that if a company pursues objects beyond the scope of the memorandum of association, the company's actions are ultra vires and void. Lord Cairns LC said,