Pre-Registration Contracts & Internal Governance Rules

3958 WordsDec 30, 201016 Pages
Law of Associations 200018 Copyright © 2002 Thomas Feerick Lecturer School of Law, UWS Lecture 6 – Week 6 Pre-Registration Contracts & Internal Governance Rules This lecture has 2 parts. Part 1 examines the legal implications of ‘pre-registration contracts’. Part 2 discusses ‘internal governance rules’. 1. Pre-Registration Contracts The people who form a company or procure its formation are commonly known as ‘promoters’. The courts have construed the term ‘promoter’ broadly. In Twycross v Grant (1877) 2 CPD 469, for example, Cockburn CJ declared that a promoter was: one who undertakes to form a company with reference to a given project and to set it going, and who takes the necessary steps to accomplish that purpose. In…show more content…
The following statutory provisions should be read in the light of the underlying case law. Corporations Act s 131 (1) [Ratification after registration] If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a company before it is registered, the company becomes bound by the contract and entitled to its benefit if the company, or a company that is reasonably identifiable with it, is registered and ratifies the contract: a) within the time agreed to by the parties to the contract; or b) if there is no agreed time – within a reasonable time after the contract is entered into. s 131 (2) [Liability for damages if company does not ratify or register] The person is liable to pay damages to each other person to the pre-registration contract if the company is not registered, or the company is registered but does not ratify the contract or enter into a substitute for it: a) within the time agreed to by the parties to the contract; or b) if there is no agreed time – within a reasonable time after the contract is entered into. The amount that a person is liable to pay to a party is the amount the company would be liable to pay to the party if the company had ratified the contract and then did not perform it at all. s 131 (3) [Powers of the court] …

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