5.3 Pre-Incorporation Contracts

The problem: the company does not exist before incorporation — yet the promoters must contract in advance (the premises leased, the equipment ordered, the services engaged: the formation's necessities). The classical rule: the non-existent person cannot contract — the pre- incorporation contract binds NEITHER the company (not a party — the contract made before its birth) NOR the promoters personally (they contract as agents for a future principal) — the contractual limbo. The modern solutions: the novation/adoption (the company's post- incorporation adoption by fresh assent — the adoption's discipline under the modern Act: the adoption within the time, the terms' notification); the promoter's personal liability until adoption (the intermediary rule's faces); the Companies Act 2063's treatment (the pre-incorporation contract's discipline — described functionally: the company's adoption-and-liability scheme within the Act's frame). The exam's line: the pre-incorporation contract's fate = the promoter's burden until the company adopts.