Which of the Following Statements About Pre-Incorporation Contracts Is False

question 26

Multiple Choice

Which of the following statements about pre-incorporation contracts is false?

• A) Promoters will often purchase property on behalf of a corporation prior to incorporation and then have the corporation ratify after incorporation has taken place.
• B) If a corporation does not ratify a pre-incorporation contract, or if a pre-incorporation contract is signed in a jurisdiction which does not permit ratification, the promoter remains solely liable for any losses.
• C) Many jurisdictions have made legislative changes permitting later-incorporated corporations to ratify pre-incorporation contracts.
• D) Promoters cannot be held liable for losses, due to the doctrine of corporate myth.
• E) Ratification of pre-incorporation contracts is invalid at common law, since the corporation did not exist at the time the contract was made.

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