Question

Tick the correct answer.
A provisional contract is signed by promoter before the incorporation of the company.

• A. True
• B. False

Answer 1

The correct option is A True

A provisional contract is the one which is formed after the incorporation of the company but before the commencement of its business and it states all terms and conditions to be followed while carrying on with business.

This contract is signed by the promoters after the company has been incorporated in the market because after that only company can state what it wants in the future and then only promoters can decide about the policies to promote the working and create goodwill of the company.
Thus the statement is false as provisional contracts are signed by promoters after incorporation of the company.