Question

In: Accounting

Prior to incorporation, Claire entered into a contract with Phil to provide computers to a soon...

Prior to incorporation, Claire entered into a contract with Phil to provide computers to a soon to be incorporated company, Modern Family Services Pty Ltd. Upon incorporation the directors of the company refused to ratify the contract made by Claire as they can obtain the same services less expensively from another business. Phil has spent time, expertise and money preparing to perform the contract.

Advise all parties of the issues raised and the likely outcome.

Solutions

Expert Solution

Answer

Claire has made contract with phil on behalf of the soon to be incorporated company which got incorporated as Modern Family Services Pvt. Ltd. . In this case Modern Family Services Pvt. Ltd. was not in existence when contract was entered by claire, who shall be considered as promoter. However,Company has not ratified the contract with phil who has spent time, expertise and money preparing to perform the contract for computers.

As per Companies law, Company MAY ratify the contract which has entered by Promoter prior to Incorporation within the given period, from this it can be concluded that it is at company's discretion whether to ratify the contract or not,Since comany was not in existance at the time contract entered.

Therefore in this case

  1. Claire (Being Promoter ) ,who has entered contract shall be liable to Phil for any Financial loss.
  2. Phil can sue only claire but not Modern Family Services Pvt Ltd for any loss.
  3. Modern Family Services Pvt Ltd shall not be liable as per Company law.    

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

A Buyer (Best Buy) and Seller (Dell Computers) of computers entered into a contract whereby the...
A Buyer (Best Buy) and Seller (Dell Computers) of computers entered into a contract whereby the Seller promised to deliver 5,000 laptop computers of a certain model, at $500 each, by February 10, 2016, to the Buyer’s warehouse, in time for a big promotional sale which the Buyer was planning for the President’s Day holiday. The Seller was only able to deliver 3,000 units, due to a labor strike. To “cover” the other 2,000 units, and make sure the Buyer...
Turner Construction entered into a contract to provide general construction of Granby Towers. Turner then entered...
Turner Construction entered into a contract to provide general construction of Granby Towers. Turner then entered into a subcontract with Universal to install precast concrete floors in the Granby Towers construction project. The general construction contract was incorporated by reference into the subcontract. The contract between Turner and Universal contained a “pay-when-paid provision” that conditioned any payments to Universal on Turner’s first receiving payment from Universal. Due to the economic downturn, financing for the project fell through. Universal had substantially...
A life coach entered into a contract with an introverted woman to provide a week-long course...
A life coach entered into a contract with an introverted woman to provide a week-long course that served as an introduction to the life coach's year-long program. Under the terms of the contract, the life coach would work with the woman full-time for a week to start teaching her to interact with people with more confidence. The woman would then participate in a speed-dating event as her "graduation" from the course. The contract also provided that unless the woman received...
2. On June 15, Muskoka Rentals (MR) entered into a contract to provide the following to...
2. On June 15, Muskoka Rentals (MR) entered into a contract to provide the following to Tomulka Inc for their event on August 15, 2018. - 1,500 White folding chairs - 40 large round tables - 40 large table linens - 1 arbour - The standard contract prices are as follows: Standard cost per item Chairs $2.50 Table linens $10 Round tables $20 Arbour $250 Delivery (including set up) $450 Pickup (Including tear down) $200 Muskoka Rentals has charged $5,500...
Question 3 On Sept 15, 2017, Julia Inc entered into a contract to provide 12 new...
Question 3 On Sept 15, 2017, Julia Inc entered into a contract to provide 12 new deep fryers to a Montreal Poutinerie. Julia normally charges $1,500 for each deep fryer. As part of the agreement, Julia will provide on-site training at the Poutinerie’s 3 locations. Julia will host 3 separate training sessions at each location. For this training, Julia normally charges $700 / day.   The Poutinerie needed Julia’s team to re-work some electrical for the installation. This took Julia 6...
In the law of contract, once the contracting parties agree and the contract is entered into,...
In the law of contract, once the contracting parties agree and the contract is entered into, nothing can spoil, impair or destroy the contract.Discuss
In the law of contract, once the contracting parties agree and the contract is entered into,...
In the law of contract, once the contracting parties agree and the contract is entered into, nothing can spoil, impair or destroy the contract.Discuss
JCPenny entered into a contract with Emma. The contract begins on May 1 and ends on...
JCPenny entered into a contract with Emma. The contract begins on May 1 and ends on November 31, 2020. JCpenny will exchange 100 of their most popular watches at a discount as well as 100 glasses for brand-specific marketing. The regular wholesale price of the shirts is $65. JcPenny expects the cost to produce each mask will be $6. All goods that they sell have a profit margin of about 54%. Being able to carry these exclusive products is important...
Rookie Construction Limited (RCL) entered into a contract to construct a building for $975,000. The contract...
Rookie Construction Limited (RCL) entered into a contract to construct a building for $975,000. The contract provided for progress payments. RCL’s accounting year ends December 31. Work began under the contract on August 1, 2019, and was completed on October 31, 2021. RCL uses the percentage-of-completion method to account for this long-term contract. Construction activities are summarized below: 2019 2020 2021 Construction costs incurred to date 180,000 630,000 825,000 Estimated remaining costs to complete 630,000 190,000 0 Progress Billings during...
On May 15, 2018 Phil Brubaker reached a settlement on a long overdue contract. The settlement...
On May 15, 2018 Phil Brubaker reached a settlement on a long overdue contract. The settlement results in Phil receiving a total of $2,000,000 -- scheduled over 5 annual payments of $400,000 each. The first payment starts on May 15, 2021, with the remaining 4 payments following on May 15, 2022, May 15, 2023, May 15, 2024, and May 2025. Phil wants to know the present value of his settlement today on May 15, 2018, at a 4% interest rate....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT