WS3: Pre-Incorporation Contracts and Liability in Tort and Crime Flashcards
Does CROTPA apply to pre-incorporation contracts?
No, because it would only impose obligations and not benefits on the third party.
What does S51 CA do?
Pre-incorporation contracts are enforceable as personal contracts against the promoters [people purporting to act on the company’s behalf].
E.g. promoters bear personal liability.
Can a company ratify a contract made before incorporation?
No, ratification is only possible for acts which a company could have authorised at the time.
What is the only way a company can obtain the benefit of a contract made on its behalf before it came into existence?
Novation - substituting the existing contract with a new one that is identical.
Does S51 apply to shelf companies?
No - because the company is already formed and already a legal person.
What can an agent / promoter do if they are personally liable?
They are liable but they can also enforce the provisions of a contract. The usual rules of a contract would apply e.g. misrepresentation.
How can a company be liable in tort?
Primary liability - company itself has committed tortious act
Vicarious liability - individual is responsible, but company also is liable.
What is the attribution theory of liability?
An individual must be identified as the ‘controlling mind’ of a company.
What has the attribution theory been replaced with?
Meridian Global Funds case - considering the real issue is who is the ‘controllers’ of the company.
When has a company committed corporate manslaughter?
If the manner in which its activities are managed or organised by its senior management causes the death of a person and a amounts to a gross breach of the relevant duty of care.
