Full question:
How can I get a property under contract, in order to sell to my investors without taking title?
- Category: Real Property
- Date:
- State: Texas
Answer:
A promoter is someone who initiates a business, particularly a corporation, and handles financing. The process begins with an idea, which transforms into a corporation through pre-incorporation activities. The promoter usually becomes a major shareholder or part of the management team and receives stock for their efforts.
When a promoter enters into contracts before the corporation exists, they are personally liable for those contracts. The corporation itself is not liable until it is legally formed. Promoters perform several key tasks, including:
- Seeking business opportunities
- Raising capital
- Finding investors and encouraging stock subscriptions
- Entering contracts on behalf of the future corporation
- Preparing articles of incorporation, including selecting the state and corporate name
Generally, a corporation is not bound by contracts made by promoters before its existence. A legal entity must act in its corporate capacity to be held liable for such contracts. Courts typically refuse to enforce these contracts against a corporation unless there is a compelling reason to do so.
However, after its formation, a corporation can adopt or benefit from pre-incorporation contracts made by promoters if those contracts fall within its powers. It cannot assume obligations from contracts that exceed its authority (ultra vires). A corporation can also enter into new contracts with the same parties under the same terms as the original agreement.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.