Pennsylvania Consolidated & Unconsolidated Statutes
Chapter 55 - Corporate Powers, Duties and Safeguards
Section 5503 - Defense of ultra vires

(a) General rule.--A limitation upon the business, purposes or powers of a nonprofit corporation, expressed or implied in its articles or bylaws or implied by law, shall not be asserted in order to defend any action at law or in equity between the corporation and a third person, or between a member and a third person, involving any contract to which the corporation is a party or any right of property or any alleged liability of whatever nature, but the limitation may be asserted:
(1) In an action by a member against the corporation to enjoin the doing of unauthorized acts or the transaction or continuation of unauthorized business. If the unauthorized acts or business sought to be enjoined are being transacted pursuant to any contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the action and if it deems the result to be equitable, set aside and enjoin the performance of the contract, and in so doing shall allow to the corporation, or to the other parties to the contract, as the case may be, such compensation as may be appropriate for the loss or damage sustained by any of them from the action of the court in setting aside and enjoining the performance of the contract, but anticipated profits to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained.
(2) In any action by or in the right of the corporation to procure a judgment in its favor against an incumbent or former officer, director or member of an other body of the corporation for loss or damage due to his unauthorized acts.
(3) In a proceeding by the Commonwealth under section 503 (relating to actions to revoke corporate franchises) or in a proceeding by the Commonwealth to enjoin the corporation from the doing of unauthorized or unlawful business.
(b) Conveyances of property by or to a corporation.--A conveyance or transfer by or to a nonprofit corporation of property, real or personal, of any kind or description, shall not be invalid or fail because in making the conveyance or transfer, or in acquiring the property, real or personal, any representative of the corporation acting within the scope of the actual or apparent authority given to him by the corporation has exceeded any of the purposes or powers of the corporation.
(c) Cross reference.--See section 6146 (relating to provisions applicable to all foreign corporations).
(Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; June 22, 2001, P.L.418, No.34, eff. 60 days)

Cross References. Section 5503 is referred to in section 6146 of this title.

Structure Pennsylvania Consolidated & Unconsolidated Statutes