Spence was a promotor in the incorporation of a new business. The new corporatio

Question

Spence was a promotor in the incorporation of a new business. The new corporation had not yet been formed when he bought Huffman's employment agency to serve as the nucleus of that corporation. Eventually, the corporation was formed, but it never generated enough cash to pay Huffman for the employment agency. Huffman sued Spence, attempting to hold him personally liable for the amount due. Spence claimed that the corporation was liable and that his personal assets were not a proper target of the suit. Was Spence correct? Explain 1/2 page

Explanation / Answer

as per companies act , any contract before formation of the company is void...so the activities of Spence cannot held the company liable to pay any amount due to huffman's employment agency....therefore spence is incorrect..

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