Question

Preliminary contracts are a nullity” comment on the statement bringing out clearly the position of promoters with regard to these contracts.

Answer 1

The "Preliminary contracts are a nullity" since these contracts are not incorporated. There is no legal aspect to the the preliminary contracts. These are contracts which are agreed by the companies before the legal agreement.

Explanation:

• When the companies agree to a certain sale of a property, hiring of people, or buying of any product for promoting an enterprise, and more are based on specific contracts on which they agree that  are referred to as the preliminary contracts.
• The contracts does not bind the parties nor does the promoter become liable for the contract since the contract has no legal binding or formality to it. These are initial contracts of agreement of the parties and no one can take legal action on them.
• The preliminary contracts are initiated by the promoter for the company which will be incorporated in the future. Once the company is incorporated the contracts cannot be changed or altered by the company.

To know more about preliminary contracts

Difference between preliminary and provisional contracts

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