October 2011 - Buying Property: Watch Your Wording!
You have found the perfect property, at the right price - now can you buy it in the name of a company that has not yet been incorporated?
Indeed you can - a "pre-incorporation contract" is intended to bind the company as and when it is formed. But don't - in the excitement of the moment - sign anything until you have taken proper advice. It is essential to word the agreement so that the statuses of both the signatory and of the proposed company are clear. Otherwise, as happened in a recent High Court case, you risk having to pay your legal team to argue over complex legal issues with intimidating names like "stipulatio alteri". In that case, a property sale agreement was held to be invalid for want of strict compliance with the requirements of the Companies Act.
Indeed you can - a "pre-incorporation contract" is intended to bind the company as and when it is formed. But don't - in the excitement of the moment - sign anything until you have taken proper advice. It is essential to word the agreement so that the statuses of both the signatory and of the proposed company are clear. Otherwise, as happened in a recent High Court case, you risk having to pay your legal team to argue over complex legal issues with intimidating names like "stipulatio alteri". In that case, a property sale agreement was held to be invalid for want of strict compliance with the requirements of the Companies Act.