Ultra Vires Actions, Corporate & Business Litigation

There’s a general principle in corporate and business litigation — the “business judgment rule” — which generally means that courts will not interfere in the management of the internal affairs of a corporation. Golden v. St. Joseph Milke Producers’ Association, 420 S.W.2d 31, 33 (Mo. Ct. App. 1967). For the Court to intervene, there must be actual or threatened acts which are ultra vires, fraudulent and injurious — or there is an abuse of power. Id. The rationale for this rule is that courts are not necessarily experts in the business of a particular corporation, they are reluctant to make decisions on how they should be run. While fraud and injurious actions are relatively straightforward, “ultra vires” actions are sometimes less so. An ultra vires action in the corporate and business context generally means that an officer, director or manager is acting beyond the authority extended to him or her. 
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