Pre-Incorporation Contracts Essay Example | Topics and Well Written Essays - 2250 words

Pre-Incorporation Contracts - move ExampleSection 32A (1) (a) of the Companies Ordinance of Hong Kong contains the statutory provisions governing the pre-incorporation captures. According to this section where a mortal or a promoter who enters in to a flummox on behalf of the company as factor before the incorporation of the company, then that person will become personally nonresistant under the contract unless there is an agreement to the contrary entered into between the company and such person. However it is not possible that a contract between the company and the person apprize be entered into subsequent to the incorporation which makes the company liable on the contract. (IQS)Normally a pre-incorporation contract is an incomplete contract. It is incomplete because it doesnt specify the obligations of the different parties under the contract in case it was not possible to form the company. Similarly it doesnt state the remedy for the other party in case the company after i ncorporation is not able to perform. Three different rules can be adopted to resolve the situationThe Jiangsu Province Higher peoples Court of China had promulgated definite decisions and passed on some opinions in the adjudication of certain types of company law cases that can be taken as guide lines for the determination of civil liabilities in the pre-incorporation contracts. According to the Higher Peoples Court, a company being incorporated refers to an organization which is create to carry out the acts necessary for the incorporation of the company. It can be assumed that its existence starts on the solar daylight on which the execution of the company constitution or incorporation agreement takes place and ends on the day on which the business certificate is issued to the company. In this context the necessary acts implies the legal and economic acts done for the purposes of incorporating the company and complying with the requirements for the presidency of the company in the Company Law of the Peoples Republic of China. The Higher Peoples court had expressed the following remarks on the adjudication of certain company casesWhere a promoter does a necessary act for the incorporation of the company in the name of the company, the legal consequence of such an act shall be borne by the company.Where a promoter does a civil act unnecessary for the incorporation of the company, in the name of the company, the creditor may hold the promoter obligated for the consequential civil liability. When the company after incorporation ratifies the act of