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KembaraXtra – Legal Terms – Pre-incorporation Contract
A pre-incorporation contract is a contract made on behalf of a company before the company has legally come into existence.
Under section 51 of the Companies Act 2006, the person acting on behalf of the unformed company is generally personally liable unless otherwise agreed.
That person may also enforce the contract personally.
The rule prevents uncertainty where businesses attempt to contract before formal incorporation.
Important cases include Phonogram Ltd v Lane and Braymist Ltd v Wise Finance Co Ltd.
A pre-incorporation contract is a contract made on behalf of a company before the company has legally come into existence.
Under section 51 of the Companies Act 2006, the person acting on behalf of the unformed company is generally personally liable unless otherwise agreed.
That person may also enforce the contract personally.
The rule prevents uncertainty where businesses attempt to contract before formal incorporation.
Important cases include Phonogram Ltd v Lane and Braymist Ltd v Wise Finance Co Ltd.
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