Warren was the president of a corporation whose articles of incorporation specified that the corporation's purpose was to market dairy products.Warren,however,convinced the board of directors to support him in opening a furniture store.Warren proceeded to enter into contracts with furniture suppliers.When some of the shareholders discovered that the corporation was going into the furniture business,they wanted the furniture venture ended.Unfortunately,the corporation had already entered into a contract for upholstery supplies that had been delivered.What is the term for acts of a corporation beyond its express and implied powers,and what remedies does the Revised Model Business Corporation Act provide when a corporation commits such act? What is the most likely result if the supplier of the upholstery supplies sues for payment?

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Ainsley Childress · Accepted Answer

Final Answer :

If a corporation acts beyond its express and implied powers,the act is called an ultra vires act.If a corporation commits an ultra vires act,the Revised Model Business Corporation Act (RMBCA)provides the following remedies:
1.Shareholders may sue to prohibit the corporation from fulfilling the ultra vires contract.
2.The corporation or shareholders may sue corporate directors or officers for the damages caused by the ultra vires act.
3.The state attorney general can have the corporation dissolved or prevent the corporation from fulfilling the ultra vires contract.
Courts uphold ultra vires contracts if one of the parties has executed his or her part of the contract.

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