Skip to main content

Can a corporation be a party to a contract before it incorporates?

Torrance, CA |

My company signed a three-way agreement with a corporation (let's call it Corp A) and another company (we'll call them Corp B). Things have gone a bit south, as I believe Corp A has breached this agreement.

The thing is, the agreement was signed in May of 2010. Checking the CA government's website, I've learned that Corp A wasn't even formed until July of 2010.

What does this mean for the contract? Can I still sue Corp A? And how does this affect Corp B....can I still enforce the agreement against them, or is the whole contract void?

Attorney Answers 4

Posted

Yes, the corporation can be a party to a contract as long as the corporation ratified the contract once it did come into existence. To be safe, you would sue the company that entered into the contract, the new corporation and anybody else. If your company is a corporation, then you cannot sue, you will need to hire an attorney.

Mark as helpful

3 lawyers agree

Posted

"Ratification can be determined by 1) the minutes of the new corp. expressly ratifying the contract, and/or the course of conduct of the parties in which the parties accepted the benefits of performance of the parties as provide for under the terms of the contract. A contracting party can be estopped from claiming that a contract is is enforceable after they received the benefits of the agreement and/or conducted themselves as if they was an enforecable contract.

Good luck!
Phillip M. Smith Jr.
Los Angeles Tax & Business Attorney
Licensed in the United States Tax Court
www.culvercitytaxandbusinesslaw.com
www.corporateattorney.com
www.worlclasslawyers.com
Main: 323-292-4116 ❘ Cell: 562-505-1004

THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can only be provided after consultation by an attorney licensed in your jurisdiction. The answer to question does not create an attorney-client relationship or otherwise require further consultation. Mr. Smith is licensed to practice law throughout the state of California with offices in Los Angeles County. He is authorized to handle IRS matters throughout the United States, and is also licensed to practice before the United States Tax Court. His phone number is 323-292-4116 or his email address is philsmithjr@worldclasslawyers.com.

Mark as helpful

1 lawyer agrees

1 comment

John P Corrigan

John P Corrigan

Posted

FYI...small typo but important...."A contracting party can be estopped from claiming that a contract is is enforceable" [last word s/b unenforceable].

Posted

As previously stated in the other answers A corporation may be liable if they ratified the contract. Further, you should note that who ever did sign the contract as Corp A may be able to be held personally liable for the breach.

In terms of the effect on Corp B this is dependent on the relatedness of the parties in the contract and whether the Corp B's performance was conditioned on Corp A's performance; more facts are needed to adequately analyze this question.

This answer is provided as a public service and as a general response to a general question, it is not meant, and should not be relied upon as specific legal advice, nor does it create an attorney-client relationship.

Mark as helpful

3 lawyers agree

Posted

No, because until it exists there is no entity and therefore if there is no entity nothing exists that could be a party to a contract.

Mark as helpful

Business topics

Top tips from attorneys

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics