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281 NOTES 281 side the scope of contemplated corporate activity, the courts must give effect to that intent. In England, corporate significance is given to acts outside the scope of contemplated corporate activity in the case of corporations created by the Crown, pursuant to the common law. See British South Africa Co. V. De Beers Consolidated Mines, Ltd? But in Ashbury Railway Car- riage &" Iron Co. V. Riche,^ decided in 1875, Lord Cairns examined the provisions of the Joint Stock Companies Act of 1862 and concluded that a company formed under that statute had no legal capacity to do an act outside the scope of contemplated corporate activity. There- fore, although a contract made in the name of the company, for its benefit, by its directors, and with the sanction of all its shareholders had not been performed, the company was not exposed to any liability. No corporate significance was given to the act of making the contract. This decision has so long governed later English decisions (and has had such a great influence in this country with judges who did not pause to examine the statutory provisions regulating the corporations before them, and who treated this decision as a decision at the common law) that it is a rash act to criticize it. But it is submitted that the provisions of the Joint Stock Companies Act of 1862 did not show an intent by the legislature thus sharply to limit the legal capacity (as distinguished from the legal authority) of companies formed under its provisions. One would have supposed that the rule of legal capacity applicable to cor- porations at the common law would have been applied to statutory corporations, unless the legislature had plainly indicated its intent to the contrary. Such a decision makes it a dangerous matter to enter into a contract which is, in form, with a company. Upon those who propose to contract with companies, a caveat is served, and this reacts upon companies who, of course, wish persons to feel safe in making contracts with them. The effect upon the business of the country is shown by extracts from the opinions in the principal case. By Lord Parker: "Experience soon showed that persons who trans- act business with companies do not like having to depend on inference when the validity of a proposed transaction is in question. Even a power to borrow money could not always be safely inferred, much less such a power as that of underwriting shares in another company. Thus arose the practice of specifying powers as objects. . . . But even thus, a person proposing to deal with a company could not be absolutely safe, for powers specified as objects might be read as ancillary to and exer- cisable only for the purpose of attaining what might be held to be the company's main or paramount object, and on this construction no one could be quite certain whether the Court would not hold any proposed transaction to be ultra vires. At any rate, all the surrounding circum- stances would require investigation. Fresh clauses were framed to meet this difficulty, and the result is the modern memorandum of asso- ciation with its multifarious list of objects and powers specified as objects and its clauses designed to prevent any specified object being read as ancillary to some other object." 2 [1910] I Ch. 354. » L. R. 7 H. L. 653.