Pre-Incorporation Contracts: Relevance and Enforceability in Jurisprudential Framework of Company Law
DOI:
https://doi.org/10.37591/jcgibl.v4i2.991Keywords:
promoter’s liability, enforcement, ratification, prospective, pre-incorporation contractsAbstract
India has seen strong economic development in recent decades, with the GDP rising 7.6 percent in recent fiscal years. While economic activity is robust, the country is still a long way from becoming a leader in providing efficient Corporate-Litigation mechanisms. The administration must seize the economic momentum prevailing now and use it to advance its reform programmes; one of them being reformation of laws governing Pre-Incorporation Contracts. This requires reforms at three levels. First, from the viewpoint of Protection of parties, by outlining the “Promoter’s Liability regarding Pre-Incorporation contracts”; through application of precedents under “Kelner v Baxter 1866” and “Newborne v Sensolid (Great Britain) Ltd 1953”. Second, obtaining a comparative analysis of Enforcement of Pre-Incorporation Contracts, around the world and implementing the necessary amendments; based on these observations. Third, accepting the advancement of Ratification of Pre-incorporation Contracts in Common law countries and outlining the need for a analogous legislation in Indian Law. If the government can assist in overcoming technical, institutional, and regulatory impediments, the Pre-incorporation Contracts doctrine, when combined with a rigorous titling legislation, may prove to be the most secure, transparent end means, to establish a robust Pre-Incorporation Litigation system in India.
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