contract-law debt
Can I make a contract on behalf of a company before it&#39;s incorporated with myself as the liable party?
<p>I'm starting a company and I have investors willing to lend my business partner and I some early capital, but they want a debt convertible instrument in the form of a convertible promissory note. I wanted to know if its possible to sign on behalf of the company I'm incorporating before its officially founded. </p>

<p>And if not, can I sign the contract as myself, then pass the liability to the company when its formed? </p>

<p>You can easily create a company with practically no money (in the UK, it costs you maybe £20 or £40, plus you want say £100 share capital), so there is no reason not to create the company before you have funding. </p>

<p>Your problem is that these investors most likely won't accept a "convertible promissory note" from the company, but from you personally. Any contract with the company isn't going to help them in any way if the company goes bankrupt. And no, they will <em>not</em> allow you to pass the liability to the company, because that's exactly the point, that they want you <em>personally</em> responsible. </p>

<p>(Dale M is of course perfectly right - liability can be transferred if you, the lender and the company all agree - but the lender <em>won't</em> agree).</p>

<blockquote>
  <p>I wanted to know if its possible to sign on behalf of the company I'm incorporating before its officially founded</p>
</blockquote>

<p>If you are in Australia, yes. I can't speak for other jurisdictions. Of course, company formation in Australia takes less than 48 hours so it might be easier to wait.</p>

<blockquote>
  <p>can I sign the contract as myself, then pass the liability to the company when its formed?</p>
</blockquote>

<p>If you, the lender and the company all agree, yes.</p>
