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Under Section 131 of the Corporations Act 2001, who is personally liable for a pre-registration contract if the company is not registered, or is registered but does not ratify the contract within a agreed or reasonable time?

The promoter or person who entered into the contract on behalf of the yet-to-be-registered company, unless they are released under s131(4). The vendor of the contract is liable because they entered into a contract with a non-existent entity, making the transaction void ab initio with no recourse. The director of the parent company of the promoter is automatically liable for any pre-incorporation obligations. The company itself is automatically liable from the moment it is registered, regardless of whether it ratifies the contract.

Correct Answer:

The promoter or person who entered into the contract on behalf of the yet-to-be-registered company, unless they are released under s131(4).

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