• Contract

Details of Case:
01.	Date of Quotation : Nov.2013
02.	Approval of Quotation : Nov.-2013
03.	Date for start of Work : April-2014
04.	Date of Birth / Registration of the Company : January -2014 

Question :
01.	In above case Contract is valid ?
02.	This contract is illegal ? As per The Indian Contract Act-1872 / THE COMPANIES ACT, 2013
Asked 7 months ago in Business Law from Ghaziabad, Uttar Pradesh
yes
2. yes as the promoter directors even beofre formation of company can enter into valid contract.
Devajyoti Barman
Advocate, Kolkata
5137 Answers
54 Consultations
4.9 on 5.0
1) if company has been incorporated in January 2014 contract could not have been awarded to the company prior to it being incorporated 

2) in order for a company to undertake business, and more specifically to incur liabilities and obligations to third parties by entering into contracts and agreements, it must first exist and it is only capable of demonstrating that it does so exist by virtue of appropriate registration 

Ajay Sethi
Advocate, Mumbai
23089 Answers
1212 Consultations
5.0 on 5.0
Hello,
1) If the contract that was entered into was with the 'Company' while it was not in existence the contract is not valid and can not be enforced legally.The draft of the contract/quotation needs to be perused for a detailed understanding to form the best opinion.

2) As stated above an invalid contract is not legally viable as well.
S J Mathew
Advocate, Mumbai
1949 Answers
65 Consultations
5.0 on 5.0
A company cannot  enter into a contract before it is incorporated, because it does not exist as a legal person yet.

2) the case Kelner V. Baxter (1866) 2LR 2CP 174a company cannot ratify a contract, or purported contract, entered into on its behalf if the company was not in existence at the time a person purported to enter into a contract on its behalf.

3)_ In Buffington v. Bardon 80wis 635(1891) the English court observed that: “The law is that a corporation is liable for its own acts only after it has a legal existence.
Ajay Sethi
Advocate, Mumbai
23089 Answers
1212 Consultations
5.0 on 5.0
what is the contract and when the contract is executed? please specify the details to get best advise
Nadeem Qureshi
Advocate, New Delhi
3513 Answers
129 Consultations
4.9 on 5.0
Section 15 in The Specific Relief Act, 1963
15. Who may obtain specific performance.—Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by

h) when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company: Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.


2) specific performance of a contract is enforceable against a company where its promoters or agents have entered into a valid contract on behalf of the company before its incorporation. if company has accepted such contract then it would be valid 
Ajay Sethi
Advocate, Mumbai
23089 Answers
1212 Consultations
5.0 on 5.0
An contract comes into inception if two parties agree on the same thing in the same sense. Was it not known to the other party that the company with which they are contracting is yet to be incorporated according to the law? If both the parties have with complete knowledge entered into a contract then absence of corporate character of the company as on the date of execution of contract does not render the contract void.
Ashish Davessar
Advocate, Jaipur
18055 Answers
445 Consultations
5.0 on 5.0
If the conditions for tender or contract states that the company should be a registered company as on the date of fling the quotation for the contract or agreement, then this unregistered company is not eligible to participate in the tender process and may not be eligible for the contract to be awarded. 
If any contract awarded overlooking this rule, shall be held invalid.
The conditions of the contract is to be seen for further opinion. 
T Kalaiselvan
Advocate, Vellore
13908 Answers
127 Consultations
5.0 on 5.0
Any ref.case ?


No member of an unregistered firm can enforce his rights under the partnership contract against either the firm or any present or past member of it, nor can the firm sue its customers on their contracts. The firm remains liable to be sued by persons outside it, and cannot plead a set-off. Only suits for dissolution of the firm, and the powers of official assignees under the Insolvency Acts, are exempt from the prohibition. A small and harmonious firm dealing in a small way and mainly for ready money might be content to take these risks, mitigated as they are by the proviso of sub-s (4)(b) as to claims not exceeding Rs 100 in value. For a business of any considerable magnitude they appear sufficiently deterrent. Mandatory character
Now, the mischief primarily intended to be prevented by the mandatory provisions of Section 69 was the hardship and difficulty to which third parties dealing with a firm were subjected in the matter of proving as to who were the partners. As to the provisions affecting the partners themselves it seems clear that the main object and intention of the Legislature was to prevent a partner from enforcing his claims against fellow partners if the firm was not registered and to compel in such a case dissolution of the firm by laying down that the court will entertain suits only when dissolution and accounts and winding up of the affairs of the firm is sought or where accounts or winding up of the affairs of an already dissolved firm is sought.


Effect of Subsequent Registration
HARRIES CJ of the Patna High Court explained the reasons for this approach:
"Subsequent registration cannot cure the initial defect. A plaint filed by an unregistered firm is in fact no plaint at all, because Section 69 makes claims arising out of a contract unenforceable if the firm is unregistered at the date of the institution of the suit. An unregistered firm has no right to sue and, therefore, a plaint filed by it has no legal effect. If at the time the plaint is filed the claim is bound to fail, how subsequent registration can improve the position. The single Judge of the Calcutta High Court held that there was no reason why the court should not treat the plaint as filed on the date of registration. But I know of no provision of law, which permits a court to treat a plaint as filed on a date subsequent, to the date upon which it was actually filed. The best course in such a case for the suer to adopt is to institute a fresh suit after registration and the court will entertain it if it is still within time.

There will also be this further difficulty that once a dispute between the partners has arisen, all of them may not sign the application form and consequently the firm may remain unregistered and even if registration is obtained by dropping the names of adversaries, those whose names do not figure in the registration cannot still be sued as partners. It is, therefore, advisable to have the firm registered when it is constituted. Partners cannot be compelled to sign registration documents, nor an action is allowed to so compel them. Registration of Sub-partnership A sub-partnership, (Section 29), is the agreement by a partner to share his share of the profits with certain other persons. Since the Partnership Act applies to such partnerships also, for the purposes of suits as between them registration of the sub-partnership would seem to be necessary. Such firms have been recognized as valid for registration purposes.

Scope of Sec.69 (1) And Matters Outside Its Preview
Two conditions are necessary to enable a partner to sue his co-partners or the- firm. First, the firm should be registered and, second, the name of the partner suing must figure in registration. The scope of the sub-section was examined by the Bombay High Court in S.H. Patel v. Husseinbhai Mohd, a case where the action was between two former partners to enforce an agreement restraining the outgoing partner from carrying on in some area any business similar to that of the firm and the court had to examine whether such suit was maintainable the firm being unregistered.

There are many settled laws in this regard, you may make a search in google.
T Kalaiselvan
Advocate, Vellore
13908 Answers
127 Consultations
5.0 on 5.0
according to section 4/5/6 of the indian contract act, a contract is completed when acceptance is communicated by the acceptor to the proposer. 

if at the time of such communication your company had born then contract is valid otherwise invalid. 

if all communication was made in name of company then it would be invalid otherwise valid because you can contract personally and thereafter transfer the work to the company and also it does not matter that you are director of the company. 
Shivendra Pratap Singh
Advocate, Lucknow
2706 Answers
41 Consultations
4.9 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Business Lawyers

T Kalaiselvan
Advocate, Vellore
13908 Answers
127 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23089 Answers
1212 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18055 Answers
445 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5137 Answers
54 Consultations
4.9 on 5.0
Nadeem Qureshi
Advocate, New Delhi
3513 Answers
129 Consultations
4.9 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
868 Answers
43 Consultations
5.0 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2706 Answers
41 Consultations
4.9 on 5.0
Lakshmi Kanth
Advocate, Hyderabad
221 Answers
2 Consultations
4.8 on 5.0
Shashidhar S. Sastry
Advocate, Bangalore
1232 Answers
59 Consultations
5.0 on 5.0