Question Tag: Pre-Incorporation Contracts

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BCL-Nov-2024-L1-Q2b- Pre-incorporation Contracts & Fiduciary Duty

Legal advice on pre-incorporation contract expenses and secret profits between business associates.

Darkoa lives in the United States of America (USA) and asked his long-time friend, Gyankoroma, to register a company for her in Ghana. Gyankoroma spent GH¢20,000 on documentation, filing, and processing (with the issuance of receipts being in Gyankoroma’s name). Upon the request of Darkoa, Gyankoroma rented an office premises for one year at GH¢40,000 with the receipt in the name of the newly formed company.

Darkoa just returned from the USA to start operations. Darkoa discovered that the rental agent gave GH¢4,000 to Gyankoroma as inducement for the office deal. Darkoa appointed Gyankoroma as head of operations and refused to pay the registration expenses on the basis that Gyankoroma’s monthly salary as head of operations is more than GH¢20,000 and those expenses should be borne from the secret profits Gyankoroma had earlier enjoyed.

Required:
Based on your knowledge in pre-incorporation contracts, advise the parties.

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BL – Nov 2011 – L1 – SA – Q8 – Company Law

Identifying the act required to validate a pre-incorporation contract.

Which act of a company is required to validate a pre-incorporation contract?

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BL – Nov 2023 – L1 – SA – Q8 – Company Law

This question asks about the binding nature of pre-incorporation contracts.

Pre-incorporation contracts are:
A. Binding on the company
B. Not binding on the company at all
C. Binding on the company after ratification
D. Binding on the Board of Directors
E. Binding on the third party involved

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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.

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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BCL – May 2018 – L1 – Q6a – Types of Capital and the Financing of Companies

Explain how a company acquires interest in pre-incorporation contracts.

a) Explain how a company acquires interest in pre-incorporation contracts. (4 marks)

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BCL-Nov-2024-L1-Q2b- Pre-incorporation Contracts & Fiduciary Duty

Legal advice on pre-incorporation contract expenses and secret profits between business associates.

Darkoa lives in the United States of America (USA) and asked his long-time friend, Gyankoroma, to register a company for her in Ghana. Gyankoroma spent GH¢20,000 on documentation, filing, and processing (with the issuance of receipts being in Gyankoroma’s name). Upon the request of Darkoa, Gyankoroma rented an office premises for one year at GH¢40,000 with the receipt in the name of the newly formed company.

Darkoa just returned from the USA to start operations. Darkoa discovered that the rental agent gave GH¢4,000 to Gyankoroma as inducement for the office deal. Darkoa appointed Gyankoroma as head of operations and refused to pay the registration expenses on the basis that Gyankoroma’s monthly salary as head of operations is more than GH¢20,000 and those expenses should be borne from the secret profits Gyankoroma had earlier enjoyed.

Required:
Based on your knowledge in pre-incorporation contracts, advise the parties.

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BL – Nov 2023 – L1 – SA – Q8 – Company Law

This question asks about the binding nature of pre-incorporation contracts.

Pre-incorporation contracts are:
A. Binding on the company
B. Not binding on the company at all
C. Binding on the company after ratification
D. Binding on the Board of Directors
E. Binding on the third party involved

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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.

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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BCL – May 2018 – L1 – Q6a – Types of Capital and the Financing of Companies

Explain how a company acquires interest in pre-incorporation contracts.

a) Explain how a company acquires interest in pre-incorporation contracts. (4 marks)

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