CameraIcon
CameraIcon
SearchIcon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

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

Open in App
Solution

Preliminary contracts: These contracts are signed by the promoters of a company with the third parties during the promotion of the company. These contracts are also called pre-incorporation contracts as they are created before the company is incorporated. Preliminary contracts are non-binding, as the company cannot ratify them. Therefore, these contracts are not enforceable unless fresh contracts are created on the same terms and conditions after the company comes into existence.

Provisional contracts: These contracts are signed after the incorporation of a company and before the commencement of business. They are different from preliminary contracts as they are enforceable automatically once the company obtains the certificate of commencement of business.


flag
Suggest Corrections
thumbs-up
12
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Legal Protection of Consumers
BUSINESS STUDIES
Watch in App
Join BYJU'S Learning Program
CrossIcon