ExpertACCA · Question 52 · The formation and constitution of business organisations
Section B - Scenario 3
SCENARIO: 'Lunar Logistics Ltd' is a space-freight startup. Before the company is officially incorporated at Companies House, the founders (promoters) sign a £50,000 contract with 'RocketTech' to purchase fuel tanks. The contract is signed 'by John, on behalf of Lunar Logistics Ltd'. Two weeks later, the company is incorporated. The board of directors immediately passes a resolution stating that the company 'adopts and ratifies' the fuel tank contract.
QUESTION: Who was legally liable on the contract at the exact moment it was signed?
Section B - Scenario 3
SCENARIO: 'Lunar Logistics Ltd' is a space-freight startup. Before the company is officially incorporated at Companies House, the founders (promoters) sign a £50,000 contract with 'RocketTech' to purchase fuel tanks. The contract is signed 'by John, on behalf of Lunar Logistics Ltd'. Two weeks later, the company is incorporated. The board of directors immediately passes a resolution stating that the company 'adopts and ratifies' the fuel tank contract.
QUESTION: Who was legally liable on the contract at the exact moment it was signed?
Answer options:
Lunar Logistics Ltd.
John, personally.
RocketTech, as they assumed the risk.
No one, the contract was void ab initio.
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