ACCA · Question 12 · The formation and constitution of business organisations
Section A
Elena is setting up a new company, 'AgriVert Ltd', to operate vertical farms. Before the company is officially incorporated, Elena signs a lease agreement for a warehouse 'for and on behalf of AgriVert Ltd'. Once incorporated, the company decides it does not want the warehouse. Who is legally liable on the lease agreement?
Answer options:
AgriVert Ltd is liable because Elena signed on its behalf.
Elena is personally liable.
The contract is void and neither party is liable.
AgriVert Ltd becomes liable as soon as it is incorporated through automatic ratification.
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