DARIO CALIGARA V GIOVANNI SARTORI AND COMPANY LIMITED

DARIO CALIGARA V GIOVANNI SARTORI AND COMPANY LIMITED

HIGH COURT OF LAGOS

18th September, 1961

DARIO CALIGARA

(Plaintiff)

V.

GIOVANNI SARTORI AND COMPANY LIMITED

(Defendant)

Coram: Sowemimo J.

A. COMPANY LAW

1. Pre-incorporation Contract–are pre-incorporation contracts binding on the company?

The law is that “A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it” Paragraph 824 Page 425 of Volume 6 Halsbury’s Laws of England, 3rd Edition.

2. Pre-incorporation contracts–can they be ratified by the company to render them enforceable?

The law is that “A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it” Paragraph 824 Page 425 of Volume 6 Halsbury’s Laws of England, 3rd Edition.

3. Pre-incorporation contracts–can parties rely on the principle of agency to enforce such contracts?

The law is that “A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it” Paragraph 824 Page 425 of Volume 6 Halsbury’s Laws of England, 3rd Edition.

4. Pre-incorporation contracts–remedies available to parties thereof

The law is that “A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it” Paragraph 824 Page 425 of Volume 6 Halsbury’s Laws of England, 3rd Edition.

MAIN JUDGMENT

SOWEMIMO, J.:—

The short point for decision in this case is whether a contract entered into by a promoter of a company before its incorporation is enforceable.

It is not in dispute that sometime in December 1956, one G. Sartori approached the Plaintiff for a loan of money for the defendant Company. At that time the Company unknown to the Plaintiff was not in existence. He gave a cheque for £800 in the name of the Company to G. Sartori who ultimately cashed it on 9th January, 1957 The Company was incorporated on 24th January, 1957,

The law is that “A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it” Paragraph 824 Page 425 of Volume 6 Halsbury’s Laws of England, 3rd Edition. As I earlier mentioned at the time the cheque was cashed the defendant company was not in existence and it could not be said to have taken the benefit of this contract. In the result the Plaintiff’s claim must fail. He has his remedy which he can enforce against the proper person.

The Plaintiff’s claim is hereby dismissed with £26—5s Costs.

Action dismissed.