WRONG Flashcards
What is a promoter?
A promoter procures commitments for capital and instrumentalities on behalf of a corporation that will be formed in the future.
Generally, are promoters liable on contracts they enter into on behalf of the corporation not yet formed?
Yes, in general they are personally liable.
How long does personal promoter liability continue?
Promoter liability continues even after the corporation is formed and even if the corporation also becomes liable on the K by adopting it.
What is the exception for promoter liability on a preincorporation K?
A promoter will NOT be liable on a preincorporation K if the agreement between the parties expressly indicates that the promoter will not be bound.
If a K expressly indicates that a promoter is not to be bound what is the K to the proposed corporation?
In that case, the contract is considered to be an offer.
Can one be an agent of a nonexistent principal?
NO.
Generally, is a corporation liable for a K entered into by a promoter?
No.
How can a corporation become liable on a promoter’s K?
A corporation can become liable on a promoter’s K if it adopts the K.
adoption/ratification can be:
express or implied
Express adoption of the K requires:
express official action to adopt the K with knowledge of the material facts, like a resolution by the board of directors.
implied adoption of the K requires:
that someone in a position of authority accepts the K by accepting the benefits of the K with knowledge of material facts (by acquiescence or conduct normally constituting estoppel)
