Outline the rules that govern pre-incorporation contracts.
Cite relevant case-law to support your answer.
ANSWER
a) A pre-incorporation contract is a contract entered into before a company is incorporated.
Rules governing pre-incorporation contracts
• A pre-incorporation contract does not bind the company. Kelner v Baxter
• A company cannot ratify a pre-incorporation contract Natal Land Co. v Pauline Colliery Syndicate Price v Kelsal
• A promoter is personally liable on a pre-incorporation contract Kelner v Baxter R V Kyslant
• The company may be bound a pre-incorporation contract if it enters into a new contract similar to the previous agreement. Mawagola Farmers Co. v Kayanja and others
• Before incorporation the company lacks contractual capacity and cannot have agents