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Law Case Presentation in Hk

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Submitted By chris06061991
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Current Practice: Companies Ordinance (Cap.622) Section 122

This section deals with disputes arising from pre-incorporation contract.

(1)Secction 122 of Companies Ordinance applies if a contract purports to have been made in the name or on behalf of a company before the company was incorporated; (2) Section 122 is subject to any express agreement to the contrary: (a) The contract has effect as a contract entered into by the person purporting to act for the company or as an agent for the company; and (b) the person is personally liable on the contract and is entitled to enforce the contract.

(3) After incorporation, the company may ratify the contract to the same extent as if (a) the company had already been incorporated when the contract was entered into; and (b) the contract had been entered into on the company’s behalf by an agent acting without the company’s authority.

(4) Despite subsection (2)(b), if the contract is ratified by the company, then on and after the ratification, the liability of the person mentioned in that subsection is not greater than the liability that the person would have incurred if the person had entered into the contract after the company’s incorporation as an agent acting without the company’s authority.

Application of Companies Ordinance

Section 122(2) rules out that the promoter is personal liable and can enforce the contract. [Bay v Illawarra Stationery Supplies Pty Ltd (1986) 4 ACLC 429]

Before the incorporation in 2015, N-Viro Energy Limited has entered the business incubator program and signed business agreement with Southwest University of Science and Technology (SWUST) in Sichuan Province situated in China in October 2014.

If the contract was signed by the promoter of N-Viro Energy Limited, that promoter who has purported to contract for the N-Viro Energy Limited is personally liable on the business

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