Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 183

183. (1) In this section:

   (a)  a reference to a non-existent company purporting to enter into a
        contract is a reference to:

        (i)    a person executing a contract in the name of a company, where
               no such company exists; or

        (ii)   a person purporting to enter into a contract as agent or
               trustee for a proposed company;

   (b)  a reference to a person who purports to execute a contract on behalf
        of a non-existent company shall be construed as a reference to a
        person who executes a contract or purports to enter into a contract as
        mentioned in subparagraph (a) (i) or (ii);

   (c)  a reference, in relation to the purported entry into a contract by a
        non-existent company, to the formation of the company is a reference
        to:

        (i)    if a person has executed a contract in the name of a company
               and no such company exists-the registration, under Division 1
               of Part 2.2, of a company that, having regard to all the
               circumstances, is reasonably identifiable with the company in
               the name of which the person executed the contract; or

        (ii)   if a person has purported to enter into a contract as agent or
               trustee for a proposed company-the registration, under Division
               1 of Part 2.2, of a company that, having regard to all the
               circumstances, is reasonably identifiable with the proposed
               company.

(2) Where:

   (a)  a non-existent company purports to enter into a contract; and

   (b)  the company is formed within a reasonable time after the contract is
        purported to be entered into; the company may, within a reasonable
        time after it is formed, ratify the contract.

(3) Where a company ratifies a contract as provided by subsection (2), the
company is bound by, and entitled to the benefit of, that contract as if the
company had been formed before the contract was entered into and had been a
party to that contract.

(4) Where a non-existent company purports to enter into a contract and:

   (a)  the company is not formed within a reasonable time after the contract
        is purported to be entered into; or

   (b)  the company is formed within such a reasonable time but does not
        ratify the contract within a reasonable time after the company is
        formed; the other party or each of the other parties to the contract
        may, subject to subsection (6) and (9), recover from the person or any
        one or more of the persons who purported to execute the contract on
        behalf of the non-existent company an amount of damages equivalent to
        the amount of damages for which that party could have obtained a
        judgment against the company if:

   (c)  where the company has not been formed as mentioned in paragraph
        (a)-the company had been formed, and had ratified the contract as
        provided by subsection (2); or

   (d)  where the company has been formed as mentioned in paragraph (b)-the
        company had ratified the contract as provided by subsection (2); and
        the contract had been discharged by a breach constituted by the
        refusal or failure of the company to perform any obligations under the
        contract.

(5) Where:

   (a)  proceedings are brought to recover damages under subsection (4) in
        relation to a contract purported to be entered into by a non-existent
        company; and

   (b)  the company has been formed; the court in which the proceedings are
        brought may, if it thinks it just and equitable to do so, make either
        or both of the following:

   (c)  an order directing the company to transfer or pay to a specified party
        to the contract a specified property, or specified amount not
        exceeding the value of any benefit, received by the company as a
        result of the contract;

   (d)  an order that the company pay the whole or a specified portion of any
        damages that, in those proceedings, the defendant has been, or is,
        found liable to pay.

(6) Where, in proceedings to recover damages under subsection (4) in relation
to a contract purported to be entered into by a non-existent company, the
court in which the proceedings are brought makes an order under paragraph (5)
(c), the court may refuse to award any damages in the proceedings or may award
an amount of damages that is less than the amount that the court would have
awarded if the order had not been made.

(7) Where:

   (a)  a non-existent company purports to enter into a contract;

   (b)  the company is formed, and ratifies the contract as provided by
        subsection (2);

   (c)  the contract is discharged by a breach of the contract constituted by
        a refusal or failure of the company to perform all or any of its
        obligations under the contract; and

   (d)  the other party or any one or more of the other parties to the
        contract brings or bring proceedings against the company for damages
        for breach of the contract; the court in which the proceedings are
        brought may, subject to subsection (9), if it thinks it just and
        equitable to do so, order the person or any one or more of the persons
        who purported to execute the contract on behalf of the company to pay
        to the person or persons by whom the proceedings are brought the whole
        or a specified portion of any damages that the company has been, or
        is, found liable to pay to the person or persons by whom the
        proceedings are brought.

(8) Where a person purports, whether alone or together with another person or
other persons, to execute a contract on behalf of a non-existent company, the
other party to the contract, or any of the other parties to the contract, may,
by writing signed by that party, release the first-mentioned person from any
liability in relation to the contract.

(9) Where a person has, as provided by subsection (8), released another person
from liability in relation to a contract that the other person purported to
execute on behalf of a non-existent company, then:

   (a)  notwithstanding subsection (4), the first-mentioned person is not
        entitled to recover damages from the other person in relation to that
        contract; and

   (b)  a court shall not, in proceedings under subsection (7), order the
        other person to pay to the first-mentioned person any damages, or any
        proportion of the damages, that the company has been, or may be, found
        liable to pay to that first-mentioned person.

(10) Where:

   (a)  a non-existent company purports to enter into a contract;

   (b)  the company is formed; and

   (c)  the company and the other party or other parties to the contract enter
        into a contract in substitution for the first-mentioned contract; any
        liabilities to which the person who purported to execute the
        first-mentioned contract on behalf of the company is subject under
        this section in relation to the first-mentioned contract (including
        liabilities under an order made by a court under this section) are, by
        force of this subsection, discharged.

(11) Any rights or liabilities of a person under this section (including
rights or liabilities under an order made by a court under this section) in
relation to a contract are in substitution for any rights that the person
would have, or any liabilities to which the person would be subject, as the
case may be, apart from this section, in relation to the contract.

(12) Where:

   (a)  a person purports to enter into a contract as trustee for a proposed
        company; and

   (b)  the company is formed within a reasonable time after the person
        purports to enter into the contract but does not ratify the contract
        within a reasonable time after the company is formed; then, despite
        any rule of law or equity, the trustee does not have any right or
        indemnity against the company in respect of the contract.

(13) For the purposes of this section, a contract may be ratified by a company
in the same manner as a contract may be made by a company under section 182,
and section 182 has effect as if:

   (a)  a reference in that section to making a contract were a reference to
        ratifying a contract; and

   (b)  the reference in subsection 182 (3) to a contract executed, or
        purporting to have been executed, under the common seal of a company
        were a reference to a contract ratified, or purporting to have been
        ratified, under the common seal of a company.