DARIO CALIGARA (PLAINTIFF)
GIOVANNI SARTORI AND COMPANY LIMITED (DEFENDANT)
(1961) All N.L.R. 555
Division: High Court of Lagos
Date of Judgment: 18th September, 1961
Case Number: Suit No. LD/471/1960
Before: Sowemimo, J.
Prior to incorporation of the defendant Company one Sartori obtained a loan of £800 from the plaintiff in the name of the defendant Company. The loan was made by a cheque made payable to the defendant Company which, unknown to the plaintiff, was at that time not incorporated. Sartori cashed the cheque on the 9th of January,
1957, but the defendant Company was not incorporated until the 24th of January, 1957. This action was brought against the defendant Company for the recovery of the amount of the loan with interest. The plaintiff contended that the Company adopted and ratified the contract, and was bound thereby.
(1) A Promoter is not the agent of the company he is forming; and cannot bind the company by acts or contracts purported to have been done or entered into by him on the company's behalf prior to its incorporation.
(2) A company cannot ratify or adopt a contract purported to have been entered into on its behalf by its promoters prior to its incorporation.
ACTION on Contract.
Balogun for the Plaintiff.
Adepegba for the Defendants.
Sowemimo, J.:-The short point for decision in this case is whether a contract entered into by a promoter of a company before its incorporation is enforceable.
It is not in dispute that sometime in December 1956, one G. Sartori approached the plaintiff for a loan of money for the defendant Company. At that time the Company unknown to the plaintiff was not in existence. He gave a cheque for £800 in the name of the Company to G. Sartori who ultimately cashed it on 9th January, 1957 The Company was incorporated on 24th January, 1957,
The law is that "A Company is not bound by contracts purporting to be entered into on its behalf by its promoters or other persons before its incorporation. The Company cannot, after incorporation, ratify or adopt any such contract because there is in such cases no agency and the contract is that of the parties making it" Paragraph 824 at 425 of Volume 6 Halsbury's Laws of England, 3rd Edition. As I earlier mentioned at the time the cheque was cashed the defendant company was not in existence and it could not be said to have taken the benefit of this contract. In the result the plaintiff's claim must fail. He has his remedy which he can enforce against the proper person.
The plaintiff's claim is hereby dismissed with £26-5s Costs.