Final answer:
A person is not liable for pre-incorporation contracts without novation. Novation is when a new party replaces one of the original parties in the contract, shifting the liability.
Step-by-step explanation:
In general, a person is not liable for pre-incorporation contracts unless there is novation. Novation refers to a process where a new party takes on the obligations and benefits of a contract, essentially replacing one of the original parties. Without novation, the person who signed the contract on behalf of the yet-to-be-incorporated company will remain personally liable for the contract.
For example, if John signs a contract as the representative of ABC Company before ABC Company is officially incorporated, John would normally be personally liable for the contract. However, if there is a novation and ABC Company becomes incorporated, the liability may shift from John to the newly incorporated ABC Company.
It is important to consult a legal professional to understand the specific circumstances and laws that apply in your jurisdiction.