PROMOTERS CONTRACT-RATIFICATION THEREOF:

                                                                                                 
                                                                                                      A contract is valid contract when it satisfies all the elements of valid contract. A valid Contract is an agreement which is enforceable by law. To form an agreement there must have two parties. In promoters contract on behalf of company before its incorporation is not satisfy basic condition to form an agreement. Because of a company will not come into existence before its incorporation and a person cannot act on behalf of a person who is not in existence. So all the contract entered by the promoters on behalf of a company before its incorporation is not binding on the company after its incorporation.

Specific performance of a contract which is entered by the promoters on behalf of a company before its incorporation may be enforced against the company if it satisfies the following conditions:

v  If such contract is warranted by the terms of incorporation. And

v  The company has accepted the contract. And

v  Communicated the acceptance to the other party.