Pre-Incorporation Contracts: Relevance and Enforceability in Jurisprudential Framework of Company Law

Abstract

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.