Kelner v Baxter
1866 · (1866) LR 2 CP 174
Posted By lanbuk.com
- Facts
- of a proposed hotel company signed an agreement to buy wine 'on behalf of' the company. The company was formed and the wine consumed, but the company failed before paying.
- Issue
- Were the promoters personally liable, and could the company ratify the contract?
- Held
- The promoters were personally liable. The company could not ratify a contract made before it existed.
- Principle
- At common law a person who contracts for an unformed company is personally liable, and the company cannot ratify.
- Why it matters
- In Sierra Leone the rule is now in section 59 of the Companies Act 2009, which lets the company ratify.
Words and Latin in this note
- Promoter
- A person who undertakes to form a company for a project and takes the steps to set it going. Under section 50 of the Companies Act 2009 a promoter is a fiduciary and must not make an undisclosed profit. Open the note.
For study only. By lanbuk.com. Always check current sources and consult a qualified professional.