How can I get a property under contract, in order to sell to my investors without taking title?
Full Question:
Answer:
A promoter is a person who starts up a business, particularly a corporation, including the financing. The formation of a corporation starts with an idea. Pre-incorporation activities transform this idea into an actual corporation. The individual who carries on these pre-incorporation activities is called a promoter. Usually the promoter is the main shareholder or one of the management team and receives stock for his/her efforts in organization.; Most states limit the amount of "promotional stock" since it is supported only by effort and not by assets or cash. If pre-incorporation contracts are executed by the promoter in his/her own name and there is no further action, the promoter is personally liable on them, and the corporation is not.
Promoters perform the following in the formation of the corporation:
b. They raise capital.
c. They find investors and encourage them to enter into stock subscription agreements.
d. They enter into contracts on behalf of the corporation to be formed.
e. They cause the articles of incorporation to be prepared, in which process they select the state of incorporation, select a corporate name, or plan special charter provisions to be included.
Generally, a corporation is not bound by contracts entered into on its behalf prior to its existence. Until articles or a certificate of incorporation have been filed and approved or other essential steps are taken to bring a corporation into legal existence, a corporation has no being, franchise, or faculties. Its promoters or those engaged in bringing it into existence are in no sense identical with the corporation, nor do they represent it as agents or have any authority to enter into preliminary contracts binding upon it. Because a corporation cannot have agents, contract for itself, or be contracted with prior to its incorporation, it is not liable on any contracts that a promoter makes for its benefit prior to incorporation unless it assumes the obligation by its own act after incorporation or liability is imposed by statute. In other words, a promoter's contract does not, by the incorporation of the contemplated company, automatically become the contract of the corporation. A legal entity must act in its corporate capacity before it will be held liable on a contract entered into by a promoter on its behalf, because the mere act of incorporation alone is insufficient to impose liability. Courts of equity refuse to enforce against a corporation a contract made on its behalf by promoters unless there appears to be some sound equitable reason demanding its enforcement.
However, a corporation can acquire rights and subject itself to liabilities with respect to pre-incorporation matters. A corporation may after its organization become liable on preliminary contracts made by its promoters by expressly adopting such contracts or by receiving the benefits from them, if such contracts are within the scope of the corporate powers and not otherwise objectionable. A corporation as a legal entity cannot assume the obligations of an ultra vires contract made by its promoters any more than it can legally initiate such a contract.
A corporation can also enter into a new contract with the same parties on the same terms as those in the original agreement.
