A company can ratify preliminary contracts after incorporation.

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Solution

The statement is FALSE.
This is because a preliminary contract are signed before the incorporation of a company. These are contracts which the promoter undertakes with the third party during the company’s promotion. Thus, the company cannot ratify preliminary contracts after incorporation and cannot also be forced to honour these contracts.

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Similar questions

Preliminary Contracts are

(a) binding the company

(b) binding on the company, if ratified after incorporation

(d) not binding on the company

Preliminary Contracts are signed

(a) before the incorporation

(b) after incorporation but before capital subscription

(d) after commencement of business

A company can commence business after incorporation.

A provisional contract is signed by promoters before the incorporation of the company.

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