
Preincorporation Agreement of Professional Corporation of Attorneys Form


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People also ask
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When a promoter enters into a preincorporation contract, is the promoter personally liable on the contract?
Recollecting the common law position, promoters who execute a pre-incorporation contract in the name of a proposed corporation are personally liable on the contract even though they assume they are acting on behalf of a proposed corporation, and notwithstanding that they acted solely in contemplation of the formation ...
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What is a pre-incorporation contract?
'A contract that purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract ingly. '
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What are the requirements for a valid pre-incorporation contract?
'Any contract made in writing by a person professing to act as agent or trustee for a company not yet incorporated shall be capable of being ratified or adopted by or otherwise made binding upon and enforceable by such company after it has been duly incorporated as if it had been duly incorporated at the time when the ...
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What are the advantages of a pre-incorporation contract?
It can limit the personal liability of the organizers. It can save the organizers and the soon to be formed corporation a great deal of time, money, and energy.
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Is personally liable for the preliminary contracts?
Therefore, it is the promoters alone who remain personally liable for the preliminary contracts. The reason for this is that the preliminary contract is made for a company which, as known to both the contracting parties, is as yet non-existent.
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How can a promoter avoid personal liability?
Even if you are currently on the hook for a contract entered into as a promoter, there is a possible alternative to escape personal liability: a novation. You may be able to agree to have the contracting party replace the promoter with the now-existing corporation as the new liable party.
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Who is liable for contracts entered into on behalf of the corporation before?
Promoters are personally liable for pre-incorporation contracts because at the time of the formation of a pre-incorporation contract the corporation was non-existent.
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Is a promoter liable on pre-incorporation contracts?
Promoters are generally held personally liable for pre-incorporation contract. If a company does not ratify or adopt a pre-incorporation contract under the Specific Relief Act, then the common law principle would be applicable and the promoter will be liable for bsignNow of contract.
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