Pre-Incorporation or Preliminary Contracts
The promoters of a company usually enter into contract to acquire some property or right for the company, which is yet to be incorporated. Such contracts are called Pre-Incorporation or Preliminary Contracts.
Position of promoters as regards Pre-Incorporation or Preliminary Contracts
· Company not bound by pre-incorporation contract English & colonial produce co. ltd Re (1906) 2 ch. 435. A solicitor prepared the memorandum and Articles of association of a company and paid the necessary registration fees and other incidental expenses to obtain of the company. He did this on the instruction of certain persons who later became directors of the company. Held, the company was not liable of his work.
· Company can not enforce pre-incorporation contract
Natal land & colonization co. Ltd. V. Pauline colliery & Development syndicate ltd., (1904) A.C. 120. The N company agreed with an agent of the P syndicate Ltd before its formation to grant a mining lease to the syndicate. The syndicate was registered and discovered a seam of coal. The company refused to grant the lease. Held, there was no binding contract between the company and the syndicate.
· Promoters are personally liable
The promoters of a company usually enter into contract to acquire some property or right for the company, which is yet to be incorporated. Such contracts are called Pre-Incorporation or Preliminary Contracts.
Position of promoters as regards Pre-Incorporation or Preliminary Contracts
· Company not bound by pre-incorporation contract English & colonial produce co. ltd Re (1906) 2 ch. 435. A solicitor prepared the memorandum and Articles of association of a company and paid the necessary registration fees and other incidental expenses to obtain of the company. He did this on the instruction of certain persons who later became directors of the company. Held, the company was not liable of his work.
· Company can not enforce pre-incorporation contract
Natal land & colonization co. Ltd. V. Pauline colliery & Development syndicate ltd., (1904) A.C. 120. The N company agreed with an agent of the P syndicate Ltd before its formation to grant a mining lease to the syndicate. The syndicate was registered and discovered a seam of coal. The company refused to grant the lease. Held, there was no binding contract between the company and the syndicate.
· Promoters are personally liable
Comments
Post a Comment