Question

effects of pre - incorporation contracts ​

Answer 1

Answer:

The company cannot be sued on the preliminary Contracts even though when it comes into existence and takes the benefit thereof. His liability will come to an end it the company adopts the agreement

Explanation:

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Answer 2

Answer:

The effects of pre-incorporation contracts promoters are generally held liable for the pre-incorporation contract.

Explanation:

• The company cannot be sued on the preliminary contracts. Even when a company comes into existence and takes the benefit.
• The company cannot be sued for the expenses, which are incurred even before the incorporation, as it was not in existence when the expenses were incurred.
• The person who represents the intended company will be liable to the vendor, even if the company ratifies the agreement.
• The liability will come to an end if the company is willing to adopt the agreement.
• Either party may cancel the agreement if the company does not adopt it before the time specified.
• According to Section 15 and 16 of the specific relief ACT, 1963, a pre-incorporation contract can be sued to enforce against a company, if it is warranted by the incorporation terms as adopted by the company.
• In such cases the director has no discretion in this situation.  

Hence, the effects of pre-incorporation contracts are liable if the company fails to implement the terms within the specified time.