Pre-incorporation contract signing did not create personal liability where the document was only a purported company contract.

A contract executed in the name of a company not yet in existence was not enforceable by the individual signer as his own personal contract. Because the company did not exist at the time of execution, there was no contracting principal capable of making the bargain. Section 32(1)(b) of the Companies Act 1948 governed how a company may make contracts, but it did not transform a document that merely purported to be a company contract into a personal undertaking by the signer. The document was therefore treated as a purported company contract signed only as authentication, and no personal contractual rights or liabilities arose for the individual.

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Issues: Whether a person who signs a contract in the name of a company not yet in existence can enforce it in his own name or incur personal contractual rights and liabilities.

Analysis: The contract on its face was a contract by the proposed company and not by the individual signer. The company was not in existence when the document was executed, so there was no contracting principal capable of making the bargain. Section 32(1)(b) of the Companies Act, 1948 was held to govern the mode by which a company may make contracts, but it did not convert a document purporting to be the company's contract into a personal contract of the signer. As the document was a purported company contract signed only as authentication on behalf of a non-existent company, there was never any contract capable of being enforced by the individual as his own.

Conclusion: The signer could not treat the transaction as his personal contract, and the defence that no contract existed was upheld.

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