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Pre incorporation contracts are those contracts that are necessary to run a business or incorporation. When promoters make pre-incorporation contracts, the company is just an artificial entity which means at that time, the company does not exist. So basically, it cannot be executed at the time of incorporation.

Promoters are generally held personally liable for pre-incorporation contract. If a company does not ratify or adopt a pre-incorporation contract under the Specific Relief Act, then the common law principle would be applicable and the promoter will be liable for breach of contract.

Under the strict principles of contract law, the promoter is solely liable for the breach of contract. The reason behind is that the promoter is party who enters into the contract, and not the company. The rule of privity of contract keeps away the company from pre-incorporation contract.

There are various types of pre-incorporation contracts that can be made by a company ing to their need before incorporation, such as a lease agreement, employment agreement, founder's agreement, shareholder agreement, etc.

The promoter is considered to be liable to fulfil the obligations of the corporation. It happens in case the corporation is not formed or does not adopt the contract. At the time of the signing the pre-incorporation contract, the corporation does not exist and thus, cannot be part of the contract.

Before a company is incorporated, it has no legal existence. ingly, it has no capacity to enter into a contract. The company cannot sue or be sued on a pre-incorporation contract. However, persons who conclude contracts for the unborn company can be held personally liable on such contracts.