Flashcards Studio

Diego Ramos, a promoter, organizes Omega Crest Technologies, Inc. before its incorporation and signs a contract with UltraScaff Corp. to supply scaffolding for a project to be undertaken by the future corporation. The contract is in the form: "Omega Crest Technologies, Inc., a corporation to be formed under the laws of the Philippines," and is signed by Diego in his capacity as promoter. Delivery is made; after incorporation, Omega Crest Technologies, Inc. takes over the project, and UltraScaff Corp. sues for the balance due. (a) Liabilities on the pre-incorporation contract: who is legally bound and why? (b) After incorporation, the corporation wishes to be bound by the contract. What formal step is required to bind the corporation and potentially release Diego from liability? If the corporation takes that step, what happens to Diego’s liability and UltraScaff Corp.’s claim?