Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
181: Attorneys
or “Giving someone the power to act for your company”
You could also call this:

“Companies can approve contracts made before they were officially formed”

A pre-incorporation contract is an agreement made either for a company before it’s officially formed, or by someone on behalf of a company before it’s created. You can approve (or “ratify”) these contracts within the time specified in the agreement. If no time is mentioned, you should do it within a reasonable time after the company is formed.

When you ratify a pre-incorporation contract, it becomes just as valid and enforceable as if your company had been part of the agreement from the start. You can ratify these contracts in the same way that your company normally enters into agreements.

If you don’t ratify a pre-incorporation contract, or if a court doesn’t approve it, your company can’t enforce the contract or benefit from it. This rule applies even though there are other laws about contracts.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: 183: Warranties implied in pre-incorporation contracts

or “Promises made when setting up contracts for future companies”
Next

Part 10 Administration of companies
Pre-incorporation contracts

182Pre-incorporation contracts may be ratified

  1. In this section and in sections 183 to 185, the term pre-incorporation contract means—

  2. a contract purporting to be made by a company before its incorporation; or
    1. a contract made by a person on behalf of a company before and in contemplation of its incorporation.

      1. Notwithstanding any enactment or rule of law, a pre-incorporation contract may be ratified within such period as may be specified in the contract, or if no period is specified, then within a reasonable time after the incorporation of the company in the name of which, or on behalf of which, it has been made.

      2. A contract that is ratified is as valid and enforceable as if the company had been a party to the contract when it was made.

      3. A pre-incorporation contract may be ratified by a company in the same manner as a contract may be entered into on behalf of a company under section 180.

      4. Despite subpart 1 of Part 2 of the Contract and Commercial Law Act 2017, if a pre-incorporation contract has not been ratified by a company, or validated by the court under section 184, the company may not enforce it or take the benefit of it.

      Compare
      • 1955 No 63 s 42A(1)–(3)
      • 1983 No 53 s 15
      Notes
      • Section 182(5): amended, on , by section 347 of the Contract and Commercial Law Act 2017 (2017 No 5).