A business is one of the most common forms of business, both in the United States and around the world. Millions of companies use the form of the business. The organization of the company is not limited to large companies, it is also available for small and medium-sized enterprises. However, before you include it, you should consider developing a pre-foundation contract. The promoter is personally responsible for the pre-creation contracts he enters into even after the adoption of the business, unless there has been a renewal. [6] Innovation is a legal agreement between the promoter, the company and at least one other contracting party in which each contracting party accepts that the other party, that the company replaces the project proponent under the contract. [7] Therefore, when a company is created and the contract is accepted by the company, the promoter and the company are responsible without an innovation. A company is responsible for a contract if it adopts it either by an express decision of the board of directors or by tacit acceptance by knowledge of the contract and acceptance of its benefits. [8] This is called ratification. [9] During the execution, the contracts are entered into by the promoters on behalf of the company. Although the promoters act as a representative of the company to defend their interests, while registration, the principle is not in existence. Therefore, the contracts entered into by the promoters do not bind either the company or the third party. The validity and applicability of pre-foundation contracts are still at issue.

The solution, however, lies in paragraphs 15 and 19 of the Specific Relief Act of 1963. Promoter or pre-foundation contracts are, in most cases, unavoidable. Procedures such as the registration of limited companies in India would always be linked to such contracts, either in the form of contracts with professional or real estate owners, or in some other way, which would affect the operation of the business in one way or another. While this achievement must be known to the promoters. In addition, it would be desirable to ask the experts, when executing such a contract, what aspects to consider. A pre-founding contract is conceived as a temporary agreement on legal agreements before the act of creation itself. However, as the LawTeacher website notes, such agreements can lead to complications if not carefully crafted. According to Presley v. Ponce Plaza Assocs., Florida, a creditor attempting to recover from a person who acted on behalf of a non-existent business, the creditor must prove that the person knew or should have known that the company did not exist if it acted. [10] It is therefore advisable to consult a lawyer and inquire about the possibility of including an innovation clause in pre-initial contracts. These include the other party`s express confirmation that they understand that they are contracting with an unincorporated person and company and that the contractor will only pay attention to the company and not to the project proponent if he accepts the contract. The inclusion of such a provision in a genuine pre-foundation contract can help to avoid misunderstanding and save both a great deal of money and frustration to the contracting parties, creditors and debtors.