What must happen for the pre-incorporation contract to be valid for the corporation later?

For a pre-incorporation contract to be valid for the corporation once it is formed, it must be ratified by the corporation after its formation. This means that the corporation must adopt the contract as its own for it to be binding. Pre-incorporation contracts are typically signed by individuals who intend to form the corporation, but those individuals are not acting on behalf of the corporation at that time because the corporation does not yet legally exist.

Once the corporation is formed, it can choose to ratify the pre-incorporation contract, thereby accepting the obligations and benefits under that contract. This ratification can occur through board action or other formal mechanisms. If the corporation ratifies the contract, it assumes the rights and obligations as if it had been a party to the contract from the outset, which creates enforceability against the corporation.

The other options do not accurately reflect the requirements for creating a binding obligation through a pre-incorporation contract. For instance, requiring all shareholders to sign would not address the issue of the corporation’s status, and stating that there are no further requirements dismisses the essential step of ratification. The requirement that an individual remains liable indefinitely pertains to personal liability concerns but does not establish the contract's validity for the corporation post-