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PROMOTERS & PRE-INCORPORATION CONTRACT, Fatin Nur Qamarina Binti Mohd…

- - - - The company must quickly to institute action for rescission.
      - Rights of third party
      - Affirmation of the contract
      - Parties cannot be restored to the original position
        
        Case: Lagunas Nitrate Co v Lagunas Syndicate [1899] 2 Ch 392
- - - - (b)due to his contravention of the duties of a director
      - (a) within the last five years, the person has been a director of two or more companies which went into liquidation resulting from the company being insolvent due to his conduct as a director which contributed wholly or partly to the liquidation
      - (c) due to his habitual contravention of this Act
    - - Whaley Bridge Calico Printing Co v Green
      - Twycross v Grant
- - - - i. the contract must be purportedly made on the company's behalf.
        
        The promoter or agent must make the contract on behalf of the company, not in his personal capacity.
        
        Case: Ahmad bin Salleh & Ors v Rawang Hills Resort Sdn Bhd
      - ii. the company must ratify the contract after its incorporation
        
        Once incorporated, a company must take steps to ratify the contract
        
        Ratification of contract:
        
        An express ratification occurs when the company passes a resolution either at a general meeting or at a board meeting; to specifically endorse a particular contract.
        
        It is implied when the company does any act showing acceptance of the contract such as making use of the goods in the contract or the failure to return the goods within a reasonable period.
        
        Effects: the co is bound by the contract and is entitled to the benefit of the contract.
        
        Case: Cosmic Insurance Corporation Ltd v Khoo Chiang Poh
        
        Case: Thai Hwa Realty Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri