If you`re thinking of starting a new business, you may have heard the term «pre incorporation contract» thrown around. But what exactly does it mean?
A pre incorporation contract is a legally binding agreement that is entered into before a company or business is officially incorporated. This contract outlines the terms and conditions of an agreement between two or more parties, and is intended to be executed once the company is formed.
Pre incorporation contracts are typically used to outline the terms of a business partnership, joint venture, or other business agreement. They might cover issues such as how ownership will be divided, how profits and losses will be shared, and what each party`s responsibilities and obligations will be.
One important thing to note about pre incorporation contracts is that they are not enforceable until the company is legally formed. This means that if one party breaches the terms of the contract before the company is officially incorporated, it may be difficult to seek legal recourse.
To avoid this issue, it`s important to make sure that the pre incorporation contract is well-drafted and comprehensive, and that all parties fully understand and agree to its terms before signing.
If you`re involved in a business transaction that involves a pre incorporation contract, it`s important to seek legal advice from an experienced business attorney who can help ensure that the contract is in compliance with local regulations and that your interests are protected.
In conclusion, a pre incorporation contract is a legal agreement that outlines the terms and conditions of a business transaction before a company is officially formed. It`s important to make sure that the contract is well-crafted and comprehensive, and that all parties understand and agree to its terms before signing. By doing so, you can help ensure that your business gets off to a successful start.