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The promoters of the M/s ABC Ltd hasentered into the contract, before thecompany was incorporated. Advise thepromoters the effects of pre incorporationcontracts1. Binding on the promoters2. Binding on the company3. Does not bind on the company orprospectus4. binds on the company, if the matterfalls within the object clause |
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Answer» Answer: Is a company bound by a contract entered into by the promoters on its behalf before its incorporation? While EXECUTION, the contracts are entered by the promoters on behalf of the company. ALTHOUGH, the promoters act as agent of the company to represent its INTEREST, while registration, the PRINCIPAL is not in the existence. Therefore, the contracts entered by the promoters do not BIND the company or the third party. |
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