The only formal condition for concluding a pre-foundation contract is that it must be reduced to writing. The Companies Act provides that if the company`s board of directors has neither ratified nor refused a specific pre-foundation contract concluded within three months of the date of the company`s incorporation or concluded on behalf of the company, the company is presumed to have ratified that agreement. In the event that the company is not incorporated or is not incorporated but refuses to adopt and ratify the agreement, the agent, within the meaning of the Corporations Act, is jointly liable, with any other person, for the debts provided for in the pre-founded contract. A prior contract is a contract entered into by a person acting on behalf of a non-existent company. The person at the expiry of the contract intends that the company will be bound by the provisions of the pre-foundation contract after the existence of the company. You can choose to join your business to take advantage of the benefits of the company`s structure. In this case, you should establish a pre-founding contract to define roles, responsibilities and commitments before creation. The organizers are personally responsible for pre-foundation contracts, as the company did not exist at the time of the creation of a pre-founding contract. One strategy is to avoid contract as a project promoter and simply wait until the company is officially created to enter into agreements on its behalf.
However, there may be situations where pre-foundation contracts are unavoidable. Determining potential liability for pre-foundation contracts is something that should be discussed with a lawyer and project proponent, and all liabilities must be thoroughly analyzed before being signed on the tip line. Such contracts should be carefully developed to limit the risk of personal liability of the promoter. Any contract made before a business is set up is a potential liability for the „promoter.“ A project promoter is a person or organization acting on behalf of the company that has not yet been created. [1] Presley v. Ponce Plaza Assocs. is an appeal procedure that included a conclusive summary judgment that assumed personal liability for an accelerated rent due under a tenancy agreement in which the complainant was allegedly executed on behalf of a professional association. [2] The Tribunal justified this decision on the basis that „the designated occupational association used by the applicant in the lease is not a duly registered entity, but the parties understood that it was only an abbreviated name for the applicant`s duly registered unit. [3] However, the appeal responds that its lease was entered into at any time exclusively with the applicant as an individual and that, in any event, if the applicant knowingly executed a contract on behalf of an unregistered entity, it is legally individually liable.“ [4] The Tribunal found that there was sufficient factual litigation to exclude a summary decision and that a summary judgment was therefore erroneous.
[5] In this case, teaching is to avoid possible liability as a project promoter, the parties to a contract and the contractors should always use the exact name of the company already constituted to avoid having the agreement qualified as a pre-founding contract with a unit to be formed. The promoter is personally responsible for the pre-creation contracts he enters into even after the adoption of the business, unless there has been a renewal. [6] Innovation is a legal agreement between the promoter, the company and at least one other contracting party in which each contracting party accepts that the other party, that the company replaces the project proponent under the contract. [7] Therefore, when a company is created and the contract is accepted by the company, the promoter and the company are responsible without an innovation.