ii. Liability of Corporation for Promoter Contract

Liability of Corporation for Promoter Contract

A corporation is not automatically liable on a contract made by its promoter before incorporation. Under Section 18 of the Revised Corporation Code, corporate existence and juridical personality begin when the Securities and Exchange Commission issues the certificate of incorporation. After acquiring juridical personality, the corporation may become liable by adopting the promoter’s contract. That adoption does not, by itself, discharge the promoter’s personal liability; a novation or other release is ordinarily required.