Question

6. A promoter: A. may have liability on the contracts he negotiates on behalf of the prospective corporation. B. does not hold any liability to third parties on preincorporation contracts. C. automatically becomes one of the initial directors of the corporation. D. is not liable on a preincorporation contract after the corporation’s adoption of the contract.

Answer 1

The correct answer is A. may have liability on the contracts he negotiates on behalf of the prospective corporation.

Step-by-step explanation:

The function of the promoter is basically to do a preliminary work incidental to the formation of a company, in which it is included the promotion, incorporation, and flotation, and this person is also in charge of soliciting people to invest money in the company, usually when the company is starting the business.