INTRODUCTION TO BUSINESS LAW

Introduction to Business Law

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Introduction to Business Law

Introduction

A pre-incorporated contract refers to a contract that is supposedly prepared by or on behalf of a business entity when it has been incorporated. Mainly because, at that time, corporation named in the contract of promoter has not been established when the contact is set; hence, the corporation formed is not bound by the agreement. On the other hand, parties to the contract anticipated adoption of the contract. In case, the corporation accepted the contract, after that it will suppose those liabilities and rights embark in the contract.

As soon as, a promoter get into a contract on a corporation's behalf in order to form a corporation, the promoter may possibly considered personally legally responsible to meet the corporation's obligations; however, if the corporation does not adopt the contract or is not formed. The corporation is actually does not exists when the pre-incorporation contract is made and consequently cannot be a party at the time of agreement. So, the promoter has to act as a party to the contract, and, as per law principles of the agency, as well as, he has to act as an agent under the nonexistent principal on behalf of the corporation.

Discussion

A Company Act 2006, Section 51 articulates pre-incorporation contracts, deeds and obligations. Under this section, a contract that is claimed to be made on behalf of a corporation when it does not actually exist, subject to any contract to the divergent, as one made with the individual asserting to act for the corporation or as mediator for it, and this individual is personally legally responsible on the agreement accordingly (Newborne v Sensolid, 1954). The subsection pertains to the making of a legal document beneath the law of North Ireland or England and Wales, and to the obligation undertaking under the Scotland law, since it applies to the contract making.

Before a corporation starts business, it has to go into a number of contracts as well as numerous preliminary expenses. Contracts formed with the help of promoters, let them get hold of some rights or property on behalf of a corporation, which is going to be incorporated is known as preliminary contracts or incorporation contracts (Steinfeld, 2007: 25-820).

The main point in the case of Braymist v Wise Finance was the vendor (Braymist) was not incorporated at the time contract was endorsed. Wise was unaware of that agreement was made. Sturges (William Sturges & Co.) on 4th March 1994 notified the solicitor of Wise that Braymist had forfeited the deposit and rescinded the contract.

An application for company's incorporation perhaps is filled only by the individual named in the memo, as the first proposed company's registered agent and the Registrar will not entertain an application for the company's incorporation filed by any other individual. Upon the documents receipt filed, the Registrar will register the documents; assign a distinctive number to the company; and issue an incorporation certificate to the company in the recommended ...