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Before it is incorporated, a company has no capacity to contract. So, if you want to enter into a contract with the supplier, you should do it in your name (as you are the promoter). A pre-incorporation contract is not enforceable by law and cannot even be ratified by the company later on after it is incorporated. Once you get your company incorporate...
Wazzeer Professional Network
ProfessionalI’m planning to open a startup and register it as a private company very soon. Till now the company has not been incorporated but I was talking to some suppliers and one of them is giving me a very good offer which I don’t want to lose. I want to enter into a contract with him as soon as possible. Since the supplies will be used to carry out the company’s business, can I make the contract in the company’s name? I am going to incorporate it within the month itself.
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Wazzeer Professional Network
ProfessionalBefore it is incorporated, a company has no capacity to contract. So, if you want to enter into a contract with the supplier, you should do it in your name (as you are the promoter). A pre-incorporation contract is not enforceable by law and cannot even be ratified by the company later on after it is incorporated. Once you get your company incorporated, you can enter into a new contract to implement the terms of the pre-incorporation contract.
Additionally, under the provisions of the Special Relief Act, a company can enforce a pre-incorporation contract if it is warranted by the terms of incorporation, the company has accepted the contract and the acceptance has been communicated to the other party (supplier). The converse position will also hold true, i.e., a third party will also be able to enforce such contract against the company.
about 3 years ago
View answer
I’m planning to open a startup and register it as a private company very soon. Till now the company has not been incorporated but I was talking to some suppliers and one of them is giving me a very good offer which I don’t want to lose. I want to enter into a contract with him as soon as possible. Since the supplies will be used to carry out the company’s business, can I make the contract in the company’s name? I am going to incorporate it within the month itself.
-
Wazzeer Professional Network
ProfessionalBefore it is incorporated, a company has no capacity to contract. So, if you want to enter into a contract with the supplier, you should do it in your name (as you are the promoter). A pre-incorporation contract is not enforceable by law and cannot even be ratified by the company later on after it is incorporated. Once you get your company incorporated, you can enter into a new contract to implement the terms of the pre-incorporation contract.
Additionally, under the provisions of the Special Relief Act, a company can enforce a pre-incorporation contract if it is warranted by the terms of incorporation, the company has accepted the contract and the acceptance has been communicated to the other party (supplier). The converse position will also hold true, i.e., a third party will also be able to enforce such contract against the company.
about 3 years ago
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