Question

Distinguish between 'preliminary contracts' and 'provisional contracts'.

Answer 1

$\begin{array}{ccc}\text{S.N.}& \text{Preliminary Contracts}& \text{Provisional Contracts}\\ 1.& \text{Contracts signed by}& \text{Contracts signed after}\\ & \text{promoters with third}& \text{incorporation but before}\\ & \text{parties before the}& \text{commencement of business.}\\ & \text{company.}& \\ & & \\ 2.& \text{These are not legally}& \text{These become enforceable}\\ & \text{binding on the company}& \text{only after the company}\\ & \text{and cannot be ratified}& \text{gets the Certificate of}\\ & \text{after incorporation.}& \text{Commencement of}\\ & & \text{Business.}\\ & & \\ 3.& \text{These contracts are the}& \text{These contracts are the}\\ & \text{liabilities of promoters}.& \text{responsibilites of the company.}\\ & & \\ 4.& \text{Both private and public}& \text{They can only be}\\ & \text{company have right to}& \text{undertaken by public}\\ & \text{undertake these}& \text{company.}\\ & \text{contracts}.& \end{array}$