TN Bar Practice Questions - Tennessee Bar Examination Exam

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A corporation's promoter signs a contract 'on behalf of' a corporation that has not yet been formed. After incorporation, the corporation adopts the contract. Absent a novation, who remains liable on the contract?

The promoter remains personally liable, and the corporation also becomes liable upon adoption Only the corporation, because it adopted the contract No one, because the corporation did not exist at signing Only the third party who dealt with the promoter

Correct Answer:

The promoter remains personally liable, and the corporation also becomes liable upon adoption

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