Pr-incorporation contract:
A company cannot be bound by a contract which was made on its behalf by any person and excluding a promoter before the company itself had been formed. The company cannot ratify any pre-incorporation contract and the promoters will be personally liable.
In these circumstances, the simplest and safest course for promoter is to bring the negotiation to the point of agreement but to postpone any binding contract until the company is formed and can enter into the contract for itself. In this regard a fresh contract can be accorded by the company after the incorporation.
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