Question

Esther and Salim are promoters for Kale Inc. Prior to its incorporation, Esther negotiated several pre-incorporation contracts with Ian, an investor. She signed each contract in the name of Kale Inc. Kale subsequently was incorporated, but the Kale Board of Directors refused to adopt the contracts. Ian later sues Kale, Esther, and Salim on the contracts.

Which of the following statements is true of this case?

a. Only Kale and Esther are liable as Esther, a promoter of Kale, negotiated several pre-incorporation contracts with Ian.
b. Esther is solely liable as she signed each contract in the name of Kale Inc.
c. Kale, Esther, and Salim are liable as they are sued by Ian.
d. Esther and Salim are liable as they are promoters of Kale Inc.

Answer 1

d.

Step-by-step explanation:

Kale Inc. was incorporated. Kale Board of Directors refused to adopt the contracts that Esther negotiated with Ian, an investor. Esther signed each contract in the name of Kale Inc. Later on, Ian sues Kale, Esther, and Salim on the contracts. In such a case, Esther and Salim are liable as they are promoters of Kale Inc.