Wizardry Corporation's purpose clause in its charter states the following: "To operate a home-cleaning service business." After a few years of successful operation,Wizardry is offered the challenge of landscaping a neighboring business.If Wizardry accepts the offer,it would be violating its charter under
A)the de jure doctrine.
B)the de facto doctrine.
C)the ultra vires doctrine.
D)an estoppel theory.

Question

Wizardry Corporation's purpose clause in its charter states the following: "To operate a home-cleaning service business." After a few years of successful operation,Wizardry is offered the challenge of landscaping a neighboring business.If Wizardry accepts the offer,it would be violating its charter under
A)the de jure doctrine.
B)the de facto doctrine.
C)the ultra vires doctrine.
D)an estoppel theory.

Quizplus · Accepted Answer

The ultra vires doctrine states that a corporation cannot engage in activities that are beyond the scope of its stated purpose clause in the charter. Therefore, if Wizardry accepts the offer to do landscaping, it would be violating its charter and the ultra vires doctrine. The de jure doctrine refers to the legal authority of the corporation, the de facto doctrine refers to the actual practice of the corporation, and estoppel theory refers to a legal principle that prevents someone from denying their actions or statements.

Wizardry Corporation's Purpose Clause in Its Charter States the Following: "To