Pre-incorporation contracts Flashcards
When does a company become a juristic person?
After incorporation
Before incorporation of company? The problem is ?
Contract for company cannot be concluded.
Company cannot ratify after incorporation.
Stipulans is ?
3rd-party beneficiary who benefits from an agreement
Promittens is?
A promise/ to hold out hope (from latin)
If agreement of contract is accepted after incorporation?
Company acquires rights and obligations of the contract .
Incorporator is not liable.
If agreement of incorporation is not accepted after incorporation?
-Company/incorporator is not liable unless contract states that incorporator is liable
(umgeni road v Bali 1986(A))
Promoter
is the principal - in their own name
Accepted contract after incorporation
Promotor/incorporator will
-transfers assets to company
-cede rights and delegates obligations to company.
Promotor of contract
-is personally liable until company is incorporated & contract is accepted
or if company rejects contracts
Sec 21(1)
“A person may enter into a written agreement in the name of , or purport to act in the name of, or on behalf of, an entity that is contemplated to be incorporated in terms of this Act, but does not yet exist at the time.”
After incorporation
Company may ratify agreement and will then be liable if it was party to agreement when agreement was made.
Requirement for company liablity
-Written agreement
-in the name of or on behalf of the non-existent company
-ratification
Within 3 months
-Company must ratify /reject agreement completely ,partially /conditionally.
-if not , then company is deemed to have ratified agreement.
Acceptatnce(ratification) means
-company is liable if it was party to agreement when agreement was made.
-Founder is discharged of liability
No ratification if company is incorporated/not incorporated means
Company has no rights/liabilities
-The agent /incorporator will be jointly and severally liable
-can claim from company if it derives benefits from agreement.
