Aunt Juliet wants to incorporate a small closely held corporation. Which of the following bits of advice, given to her by friends, is false?

A) She can enter into a contract on behalf of the corporation even before incorporation and the corporation will automatically be bound when it is incorporated.
B) The incorporation document to be submitted in Ontario is the "Articles of Incorporation."
C) The incorporation documents to be submitted in B.C. are called the "Memorandum" and the "Articles."
D) In some jurisdictions in Canada, she could be personally responsible for a pre-incorporation contract.
E) She has the option of incorporating federally if she wants.

Question

lucas damiano · Accepted Answer

Final Answer : A, Explanation :  The statement that a corporation will automatically be bound by a contract entered into on its behalf before incorporation is false. Pre-incorporation contracts do not automatically bind the corporation upon its incorporation; instead, the corporation must adopt the contract post-incorporation for it to be bound.

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