Agreement by Company Adopting Contract Made on Its Behalf Before Incorporation (India)
This legal template is used by a newly incorporated company in India to formally adopt and ratify a contract that was signed on its behalf by a promoter or representative before the company was legally formed. By signing this agreement, the company assumes all rights and obligations of the prior contract and releases the individual representative from personal liability.
Agreement by Company Adopting Contract made on its behalf before its Incorporation
This Agreement made at New Delhi on this………………. day of………………. 2018 between Shri A of the 1st part, Shri B of the Second part and AB & Co. Ltd. (hereinafter referred to as ‘the company’) of the third part. Whereas after the execution of the contract on 10th July, 2018 (hereinafter referred to as “the said contract”) between Shri A, the vendor, and Shri B, on behalf of the company, the said company AB & Co. Ltd. has been incorporated under the Companies Act, 2013. Now it is hereby agreed by and between the parties hereto as under: 1. The said contract dated 10th July, 2018 is hereby adopted by the company and shall be binding on the said Shri A and on the company in the same manner and shall take effect in all respects as if the company had been in existence at the date of the agreement. 2. Shri B who actually signed on behalf of the proposed company shall be discharged from all liability under the said contract as the company had adopted and ratified the said contracts. In witness whereof the parties hereunto have put their hands and signatures and the company has caused its common seal affixed in the presence of Shri……………. and Shri……………. two directors who have set their respective hands and signatures the day and year first herein above written in terms of the Resolution passed in its Board of Directors in their meeting held on……………. Common Seal Witnesses: …………………. (Signature) 1…………………. Director 2…………………. …………………. (Signature) Director Signatures of A …………………. B….………
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About this template
What is this template?
This document is a tripartite agreement between a vendor, a promoter, and a newly incorporated company. It is not a new service agreement or sales contract but a ratification of an existing one. It specifically includes a release clause for the promoter and a formal adoption clause for the company seal.
When should you use it?
Use this when a company has been registered and needs to legally take over obligations made by its founders prior to its registration. The nearest alternative is a Novation Agreement, which would be used if the original contract did not contemplate adoption by a future company.
What's inside
| Clause | Name | What it does |
|---|---|---|
| Introduction | Recitals | States that the Vendor and the Promoter entered into a contract on a specific date before the company was incorporated. |
| 1 | Adoption of Agreement | Stipulates that the company adopts the original agreement and agrees to be bound by its terms as if it had been in existence at the time. |
| 2 | Discharge of Promoter | Releases the Promoter from all personal liability under the original contract once the company has adopted it. |
Who it's for
- an Indian company ratifying a purchase agreement signed by its founder before incorporation
- a promoter seeking to transfer personal liability for a pre-incorporation contract to the newly formed entity
- a vendor requiring a formal adoption agreement from a new company to secure payment under an existing contract
How long it runs and how it's signed
Law it's drafted under
Frequently asked questions
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