Charter

I

Introduction

Charter, document conferring rights or privileges on an individual or a group of people. The term originally applied to a written conveyance of land titles, often between private parties. In this sense the word now used is deed. The term charter is used to describe a grant of land or special privileges by the state, or a solemn guaranty by the sovereign of popular rights. The Magna Carta, or the Great Charter, issued by King John of England in 1215, is one of the primary constitutional documents of the United Kingdom.

II

Colonial America

In American colonial history, three kinds of charters were granted by the English monarchs. Land was granted to companies for the purpose of establishing colonies. Examples are the charter given to the Massachusetts Bay Company by King Charles I in 1629 and the charter of Georgia, granted by King George II in 1732. Charters were sometimes granted to the inhabitants of existing settlements; the charter of Connecticut was given to the people of the colony by King Charles II in 1662. The sovereign also granted charters to individual proprietors, conveying hereditary rights over land and settlers. Proprietary charters include those of Maryland, granted to Cecilius Calvert, 2nd Baron Baltimore, by Charles I in 1632, and the original charter of New York, given by Charles II in 1664 to his brother the duke of York.

III

Modern-Day Charters

In the U.S., corporations generally are chartered by legislative acts of a state either by a statute that confers on a particular corporation the special powers and privileges named therein, or under a general law that provides the method to be pursued by persons who wish to organize a corporation. In the latter case, the articles of association, taken in connection with the provisions of the general statute, constitute the charter. If the corporation is a public one, such as a city, county, or town, the charter may be changed at will by the legislature. Such a corporation is merely an agency of the state for the exercise of governmental powers within a particular area. It has no vested right to any powers or franchises. The charter of a private corporation, however, is a contract between the state and the corporation owners. As such, it is protected from repeal or modification by the provision of the U.S. Constitution that declares that “no state shall . . . pass any . . . law impairing the obligation of contracts” (Art. I, Sec. 10). The state granting the charter may reserve the right to alter, amend, or repeal it. See Corporation.

In Britain, the privileges of towns, universities, schools, banks, and joint-stock companies were often derived from royal charters. Now, however, parliamentary sanction is generally obtained for grants of important privileges. In the case of companies, Parliament has passed a general act governing the procedure for incorporation. By complying with the provisions, anybody can obtain the privileges of incorporation.

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