Final answer:
In the context of business structures, a promoter can escape liability by having the corporation and the third party create a novation, which replaces the original agreement and releases the promoter from prior obligations. Hence, the correct answer is option (1).
Step-by-step explanation:
When an individual or group decides to start a business, they must choose a business structure that will dictate the level of liability, control, and financial responsibility they will have. The three main types of business organizations are sole proprietorships, partnerships, and corporations. A sole proprietorship is a business owned by one person, offering complete control but also full liability. A partnership involves two or more individuals sharing profits and liabilities. In contrast, a corporation is a formal legal entity separate from its owners, offering them protection from personal liability for the business's debts and obligations.
A promoter, someone who assists in the creation of a corporation, might seek to escape personal liability associated with the business's early transactions. To achieve this, a novation could be executed, whereby the third party and the newly formed corporation agree to substitute the corporation for the promoter in the original agreement, releasing the promoter from prior obligations. It's a new contractual arrangement that supersedes the old one and requires all parties to consent.