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“A company cannot enter into a contract before it has come into existence” comment.

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

Hi, Can you explain me about “A company cannot enter into a contract before it has come into existence” comment.

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19 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

A business cannot sign contracts before becoming incorporated. As a result, no one is permitted to execute a contract on behalf of that business. Pre-incorporation contracts are agreements made by a party on behalf of a business that has not yet been incorporated. the backrooms

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

The fact that a company enters into a new contract after being incorporated is always valid for a contract made before it was incorporated. phrazle weaver wordle

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Before a company is incorporated, it cannot enter into commercial contracts. ... A contract entered into by a party on behalf of a company, where that company has not yet been formed, is called a pre-incorporation contract.

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You should be knowing this as this is a LAW passed by the parliament. It was suggested by a free paper writer but was appreciated. Later it was thought upon and then passed as a bill in the parliament.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Since the pre-incorporation contract is a nullity, even the company can not sue the vendor of property, if he fails to carry out such contract. In India, However, Section 15 and 19 of the Specified relife act, 1963 have considerably alleviated the difficulty.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Pre- incorporation Contracts are contracts purported to be made on behalf of a company before its incorporation. Before incorporation, a company is non- existent and has no capacity to contract. Hence a contract, by a promoter purporting to act on behalf of a company prior to its incorporation, never binds the company because at the time the contract was concluded, the company was not in existance, The promoters alone, therefore, remain personally liable for any contract they purport to make on behalf of company. Evev a company can not rectify a pre-incorporation contract. However, it is always open for a company to enter into a new contract after its incorporation to give effect to a contract made before its formation. That is called novation of propmoter's contract.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Evev a company can not rectify a pre-incorporation contract. However, it is always open for a company to enter into a new contract after its incorporation to give effect to a contract made before its formation. That is called novation of propmoter's contract.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Evev a company can not rectify a pre-incorporation contract. However, it is always open for a company to enter into a new contract after its incorporation to give effect to a contract made before its formation. That is called novation of propmoter's contract. Since the pre-incorporation contract is a nullity, even the company can not sue the vendor of property, if he fails to carry out such contract. In India, However, Section 15 and 19 of the Specified relife act, 1963 have considerably alleviated the difficulty.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Pre- incorporation Contracts are contracts purported to be made on behalf of a company before its incorporation. Before incorporation, a company is non- existent and has no capacity to contract. Hence a contract, by a promoter purporting to act on behalf of a company prior to its incorporation, never binds the company because at the time the contract was concluded, the company was not in existance, The promoters alone, therefore, remain personally liable for any contract they purport to make on behalf of company. Evev a company can not rectify a pre-incorporation contract. However, it is always open for a company to enter into a new contract after its incorporation to give effect to a contract made before its formation. That is called novation of propmoter's contract. Since the pre-incorporation contract is a nullity, even the company can not sue the vendor of property, if he fails to carry out such contract. In India, However, Section 15 and 19 of the Specified relife act, 1963 have considerably alleviated the difficulty. Section 15(h) provides that where a pre-incorporation contract is warranted by the terms of incorporation of company, The company may, if it has accepted the contract and has communicated such acceptance to the other party to the contract, obtain such specific proformance of the contract. Similarly, Section 19(e) provides that specific proformance may be enforced against the Company by other party to the contract under similar circumtance.

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