- 10 Marks
BCL – Apr 2022 – L1 – Q5b – Company directors and other officers
Analyze the validity of promoters' defense in a pre-incorporation contract case and discuss the lawfulness of for-profit companies limited by guarantee.
Question
b) The promoters of Adzeku Company, made a contract on its behalf with Ansah Oko before the company came into existence. The company once formed, purported to ratify the contract, but then went into liquidation, and the promoters themselves were sued on the contract. The promoters argued that they had been contracted as agents, and that the liability on the contract had passed to the company by ratification.
Required:
i) From the facts of the scenario above, explain if the defence set-up by the promoters is valid. Advise the promoters. (8 marks)
ii) State briefly, if it is lawful for a company limited by guarantee to be incorporated with the object of carrying on business for the purpose of making profits. (2 marks)
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