The company ceases to have any right to deal with the assets. It’s right thereto is suspended. The Receiver/Manager appointed by the Debenture holder is now regarded as agent of the company for the purposes of dealing with assets in the Receivership.
– Karibi-whyte, JSC. Intercontractors v. National Provident (1988)
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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, the rule of company law that a company is not bound by a preincorporation agreement entered into by its promoters and that the company cannot ratify such agreement after its incorporation is inapplicable to the facts of the case as pleaded in the statement of claim. As the appellant alleged that his claim was founded on the post-incorporation agreement whereas the respondents said the claim was based on the preincorporation contract, the dispute cannot be resolved in limine. The issue can only be determined upon the hearing of the case on the merits.
— Bello, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983
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”.
The rule that the company is not bound by a pre-incorporation contract purportedly made by it on its behalf, even if ratified by it after incorporation, is a rule of common law and not a statutory provision.
— Ogundare, JSC. Societe Favouriser v. Societe Generale (1997) – SC.126/1994
Before the above provisions could apply, there must be evidence of ratification by the new company of contracts made before its formation. In the case on hand, there was no such evidence. Nor was it shown who, if any body had ratified the contract between the plaintiff/appellant and the 1st defendant.
— Oguntade, JSC. Garuba v. Kwara Investment (2005) – SC.260/2000
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 can accomplish immediately. It seems to me that the inclusion of the terms of the preincorporation agreement in the memorandum of association of a company is an indication of a strong desire by the contracting shareholders that the proposed company after its incorporation should execute the terms of the agreement so included. This can be taken together with the acts of the company after incorporation in determining whether a new contract has come into existence.
— Nnamani, JSC. Edokpolo v. Sem-Edo & Ors. (1984) – SC.89/1983
One of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraud as in the instant case. – Galadima JSC. Alade v. Alic (2010)
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