ICANBusiness LawCompany Law under CAMA 2020: Incorporation2024

Chief Kalu entered into a pre-incorporation lease contract on behalf of 'Apex Logistics Ltd', a company that was yet to be incorporated. After the company was successfully incorporated, it took no steps to ratify the contract. Under Section 96(1) of CAMA 2020, what is the legal position regarding liability on this contract?

AThe company is automatically bound by the contract upon incorporation as it was made on its behalf
BChief Kalu is personally bound by and entitled to the benefits of the contract, in the absence of an express agreement to the contraryCORRECT
CThe contract is illegal and void ab initio, creating no legal obligations for any party
DThe Corporate Affairs Commission becomes vicariously liable for the contractual obligations
AI
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Why the answer is B, and why the others tempt you.
Section 96(1) of CAMA 2020 provides that prior to ratification by the company after incorporation, the person who purported to act in the name or on behalf of the company remains personally bound by the contract and entitled to its benefits, unless there is an express agreement to the contrary.
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