Pre-incorporation Contracts agreement in Delhi , NCR

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Pre-incorporation Contracts are those that the promoters enter into on the company's behalf prior to the company's incorporation in order to acquire certain rights and property. In other words, Contracts that are required to operate a business or incorporate are known as pre-incorporation contracts. These contracts are formed pre and not post-incorporation, and therefore, are called pre-incorporation contracts.

Incorporating a business offers several benefits to an individual in a corporate structure since it enables owners or shareholders to shield themselves from financial obligations since, following incorporation, it is the company that incurs debt. In order to determine the duties, responsibilities, and obligations of any organisation prior to incorporation, we can take into account pre-incorporation contracts.

Pre-incorporation contracts may be preferred in one of two circumstances;

• Internal Arrangement
• Business Arrangement

The following are the main elements that one should bear in mind when developing and negotiating any pre-incorporation contract:

• Name
• Object
• Due Date
• Address
• Name of the Proposed Directors
• Capital Contribution
• The opening of a Bank Account
• Authorized Person
• Reimbursement of Expenses
• Termination

The Indian Contract Act, 1872 states that pre-incorporation contracts are invalid since two parties are required for the creation of any contract, and in the case of pre-incorporation contracts, the firm is not yet incorporated at the time of the agreement. As a result, the contract does not mention any legal body on whose behalf it would be created. The Specific Relief Act of 1963 is the source of pre-incorporation contract enforcement in India. According to Section 15(h) of the Specific Relief Act of 1963, when promoters of any company enter into an agreement for the benefit of the company before incorporation, it is considered that the company has accepted and warranted the agreement and has also informed other parties of this.

Pre-corporation agreements are preliminary agreements made before a company's incorporation. In essence, this aids the business in establishing future norms and regulations. It establishes the obligations of each promoter for shareholders who will join the business in the future, assisting in the resolution of any ambiguities-related disputes.