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RATIONALE BEHIND NULLITY OF PRE-INCORPORATION CONTRACT

Dictum

In Kelner v. Baxter (1866) L. R. 2 C.P. 174 Erie C.J. explaining the rationale of the principle [pre-incorporation contract] said: “as there was no company in existence at the time, the agreement would be wholly inoperative unless it were held to be binding on the defendant personally…where a contract is signed by one who professes to be signing as agent, but who has no principal existing at the time, and the contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby; and a stranger cannot by a subsequent ratification relieve him from the responsibility”.

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INCORPORATED LTD. LIABILITY COMPANY IS DISTINCT FROM HER SHAREHOLDERS/DIRECTORS

In NEW NIGERIAN NEWSPAPERS LTD. V. AGBOMABINI (2013) LPELR-20741(CA) held that: “An incorporated limited liability company is always regarded as a separate and distinct entity from its shareholders and directors. The consequence of recognizing the separate personality of a company is to draw the veil of incorporation over the company. No one is entitled to...

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OBJECT CLAUSES OF A COMPANY IN ITS MEMORANDUM OF ASSOCIATION

The object clauses are no more than a list of the objects the company may lawfully carry out. They are certainly not objects that the company must execute. It is fairly common knowledge that most companies in drawing up the objects clauses of the memorandum of association cover a spectrum far wider than what they...

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LEAVE OF COURT BEFORE SUING A COMPANY UNDER LIQUIDATION

Let me quickly state that Section 417 of Companies and Allied Matters Act, 1990 is in all fours with Section 580 of Companies and Allied Matters Act, 2020. Now Section 417 of Companies and Allied Matters Act, 1990 provides:- “…if a winding up order is made or a provisional liquidator is appointed, no action or...

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APPELLANT CASE WAS BASED ON THE POST-INCORPORATION CONTRACT

The facts averred in the statement of claim which are deemed to be true for the purpose of the objection taken in limine show that the appellant and the 1st respondent company entered into a new contract in the terms of the preincorporation contract after the 1st respondent company had been incorporated. In the circumstance,...

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WHO MAY SUE FOR INJURIES DONE TO THE COMPANY

Jenkins, L.J. in Edwards Vs Halliwell (1950) 2 ALL ER 1084 @ 1066, where His Lordship held inter alia: “The rule in Foss Vs Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and or all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that if a mere majority of the company or association is in favour of what has been done, then cadit quaestio. Thus, the company or association is the proper plaintiff in all actions in respect of injuries done to it. No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company, or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the company.”

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A COMPANY’S LEGAL PERSONALITY DIES AT THE DEATH OF THE COMPANY

A company is a legal person with legal capacity to sue or be sued. That legal personality and capacity continues until the company dies a legal death in the process, and as a result of winding up and dissolution. – Oputa, JSC. Intercontractors v. National Provident (1988) Was this dictum helpful? Yes 0 No 0...

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