Ratified - pre-incorporation contract, Business Law and Ethics

Assignment Help:

Ratified - pre-incorporation contract:

If the agreement is a written one and it shows that the proposed company was the contracting party the promoters will not be allowed to enforce it in the event of its breach by the other party. This was explained in Newborne v Sensolid (Great Britain) Ltd (25) in which the judge, after observing the way in which the agreement was signed, stated:

"It is a case in which the company is contracting and the company's contract is authenticated by the signature of one of the directors. The only person who had any contract here was the company and Mr Newborne's signature merely confirmed the company's signature".

Mr Newborne, the promoter, could not be allowed to come forward and say, "Well, it is my contract". He could not therefore sue for its breach.

As the company was not in existence when the contract was signed, the legal position is that there never was a contract and the signed document was legally a  nullity.

A pre-incorporation contract cannot be ratified by the company after its registration. This is demonstrated by the facts of, and the decision in, Natal Land Co Ltd v Pauline Colliery Syndicate Ltd (25). Although the court's reasoning is not explicit the rule appears to be a consequence of the common law rule that ratification has retrospective effect. If the company were allowed to ratify the contract it would mean that it contracted on the date the contract was formed. This in effect would mean that the company contracted before it was formed. This is impossible in practice and the aforesaid rule also renders it legally impossible. If the company wishes to revive the abortive contract it must make a fresh offer and, if the offer is accepted by the other party, a contract will come into existence from the moment of the acceptance.


Related Discussions:- Ratified - pre-incorporation contract

Find the murderer, Your first big case is a multiple murder. As defense att...

Your first big case is a multiple murder. As defense attorney for SyKopath, you have come to the realization that he really did break into a couple's home and torture and kill them

Characterisation of the legislation, Your task is to examine and analyse th...

Your task is to examine and analyse the article by Shae McCrystal The Fair Work Act 2009 (Cth) and the Right to Strike. (2009) (December) Vol 23 Australian Journal of Labour Law

Capacity - sales of goods, Capacity - Sales of goods Through S.4 (1) p...

Capacity - Sales of goods Through S.4 (1) provides such capacity to buy and to sell is governed through the natural law concerning capacity for contract. Although where necess

State article 29 of international law, State Article 29 of international la...

State Article 29 of international law Article 29 states that a member of a diplomatic mission enjoys immunity from arrest or prosecution.

Employement Contract, I have a contract for employment, its is for a CTO po...

I have a contract for employment, its is for a CTO position, giving me equity stake in the company, I do not agree with the offer and I have a counter offer, I need a experts opini

Distribution of surplus assets, Distribution of Surplus Assets: If the...

Distribution of Surplus Assets: If the debts are paid in full the liquidator should apply what remains in repayment of capital paid on shares and then distribute any residue t

Important step in the policy making process, QUESTION 1 (a) According t...

QUESTION 1 (a) According to Thomas Dye "Public Policy is whatever governments choose to do or not to do". How far do you agree? (b) Explain clearly how the first important s

Account for the importance of policy evaluation, QUESTION 1 Explain cle...

QUESTION 1 Explain clearly how Public Policy making constitutes a major function of Government QUESTION 2 Account for the role of Public opinion in the identification o

Four step process to defence - law , Duomo Pty Ltd manufactures engineering...

Duomo Pty Ltd manufactures engineering equipment and is a leading industry supplier in Australia and New Zealand. The 'Duomo Drill Press' (Duomo) is a very popular product that has

Publication of list of repeat offenders, Q. Publication of list of repeat o...

Q. Publication of list of repeat offenders ? As a part of the joint education campaign option, or separate to the education campaign, a ‘naming and shaming' approach could also

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd