In relation to company law,discuss the rules that govern pre-incorporation contracts.

In relation to company law,discuss the rules that govern pre-incorporation contracts.

-This is a contract entered into by persons purporting to act on behalf of the company before its incorporation (sec.16 (2) of the Companies Act.)

- A company comes into existence on the date of incorporation mentioned in the certificate of incorporation.

- Before the date of incorporation, the company does not exist and has no capacity to contract.?? Kelner V Baxter
- The company is generally not liable on such contracts.

- A person who purports to contract as agent for a non-existent Principal is personally liable on the contract. Kelner v Baxter (1866).

- A contract purportedly entered into by or with a non-existent person is void. Newborne v Sensolid (GB) Ltd.

- The company cannot ratify a pre-incorporation contract after its incorporation. Price v Kelsal (1957)
- Natal Land Co. Ltd v Pauline Collery Syndicate

- Nor can directors adopt or confirm a pre-incorporation contract after the company?s incorporation. -North Sydney Investments and others V Higgins and others

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marto answered the question on February 5, 2019 at 11:33

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