Pre-incorporation contracts, Business Law and Ethics

Pre-incorporation Contracts:

                            A pre-incorporated contract is an agreement which is entered into, usually by a promoter or promoters, on behalf of a company at a time when the company's formation has not been completed by its registration. A few cases have been contested in English courts regarding the effect of such agreements. The following rules were enunciated by the judges in the course of deciding the said cases:

          (a)     If the agreement is a written one and it is apparent from the words used therein that the promoters were contracting as individuals, they will be held personally liable under the contract. This will be so because no oral testimony will be admissible in evidence to rebut the contents of the written document: Kelner v Baxter (23).

In other words, they will not be allowed to say that they were contracting for the company. Regarding the case of Kelner v Baxter it should be noted that,  according to the written document that the parties signed, the offer was made to, and was accepted by, the promoters personally. They were therefore made personally liable on the contract. This was clarified by Lord Goddard in the later case of Newborne v Sensolid Ltd (24) when he said that, in Kelner v Baxter, "the contract showed that it (i.e. the wine)  was agreed to be sold to certain men who were the proposed directors of a company which was coming into existence. They agreed to buy".

Posted Date: 1/12/2013 2:16:29 AM | Location : United States

Related Discussions:- Pre-incorporation contracts, Assignment Help, Ask Question on Pre-incorporation contracts, Get Answer, Expert's Help, Pre-incorporation contracts Discussions

Write discussion on Pre-incorporation contracts
Your posts are moderated
Related Questions
Companys objects: A company's objects are stated pursuant to the provisions of an Act of Parliament. It must therefore be deduced, for example, that a company whose object has

The "search incident" exception authorizes a search of the arrestee's person, including examination of personal articles such as wallets, purses, or other items, as well as the are

Negotiable Instruments - Law of Contract However past services may constitute valuable consideration to a bill of exchange under by s.27 of the Bills of Exchange Act that prov

Q. Fair Work Ombudsman options? The following are a range of potential options for the FWO to mitigate phoenix activity. These options recognise that the FWO does not currently

Purchase of Shares - Voidable Contracts However an infant who applies to is allotted, a company's shares becomes a member to the company under S.28 (2) for the Companies Act f

Compulsory winding up: At the hearing other creditors of the company may oppose the petition.  If so, the court is likely to decide in favour of those to whom the larger amoun

Theobald: Conversely there such I take to be the duty of the auditor; then he must be honest.... i.e. like he must not certify that what he does not believe to be true, reason

QUESTION 1 (a) Section 45(10) provides for remedies that the Independent Review Panel may recommend if it finds merit in an application for review. State three of those remedie

Third Reading: Now next is offers in Order 112(1) which is on the adoption of a report on a Bill the Third Reading may regarding leave of Mr. Speaker be taken forthwith and wh

Types oF Goods - Sales of Goods Further the Act classifies goods into: like; (i) Specific Goods Whether specific goods are "goods" like are acknowledged and agreed on