In a ratification by the board of a pre-incorporation contract involving the corporation,the promoter,and a third party:
A)the corporation is released from liability.
B)the promoter is released from liability.
C)the promoter is made secondarily liable.
D)none of the above

Question

Quizplus · Accepted Answer

When a pre-incorporation contract is ratified by the board, the corporation becomes primarily liable for the obligations under the contract, and the promoter becomes secondarily liable. This means that while the corporation is responsible for fulfilling the obligations, if it fails to do so, the promoter can be held liable to fulfill them. The third party is not released from liability as they were already a party to the contract.

In a Ratification by the Board of a Pre-Incorporation Contract