QST LA 245 Chapter Notes - Chapter 19: Model Business Corporation Act, American Bar Association, Unsecured Debt
23 Jul 2018
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Someone who organizes a corporation is called a promoter. A promoter is personally liable on any contract he signs before the corporation is formed. After formation, the corporation can adopt the contract, in which case, both it and the promoter are liable. The promoter can get off the hook personally only if the landlord agrees to a novation that is, a new contract with the corporation alone. A company can incorporate only under state, not federal, law. No matter where a company actually does business, it may incorporate in any state as long as it lives by the laws of whichever state it chooses. To encourage similarity among state corporation statutes, the american bar association drafted the model. Business corporation act (the model act) as a guide. A company is called a domestic corporation in the state where it incorporates and a foreign corporation everywhere else.
