Australia Corporation Acts implementation Essay Example
Section 131 of the Corporation Act 2001 deals with contract made by individuals on behalf of the still to be registered company. Subsection 1 of the Act asserts that a company is bound by contracts entered on its behalf and for its benefit prior to its registration. It requires the that he contract be reasonably identifiable with the registered company.In this case, the new company is bound by the contract made on its behalf and for its benefit. The contract to purchase the equipment targeted a significant discount for the company. By buying the amusement park equipment from Ringo, the company would be able to save a significant amount of money. The new company has an obligation under section 131 to ratify and execute any preregistration contracts within a reasonable time.
Ringo may also be able to bring a claim against the individuals who entered into contract on behalf of the unregistered company. In situations where the company does not ratify and itexecutes a pre-registration contract, the promoters who enters into contract on behalf of the company are held personally liable. Courts can compelthe companysto honour preregistration contracts in cases where action is brought for recovery of damages. Courts can order the company to either pay part of the damages, return property acquired as a consequence of the contract. Alternatively, the court may order the court to pay the amount in dispute to the offended contractual party.
In conclusion, the Corporation Act offers substantial protection to members of the public that enter into preregistration contracts with promoters of would be companies.
The Corporation Act 2001(CTH)
More Important Things