(1)A contract that purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.
(2)Subsection (1) applies—
(a)to the making of a deed under the law of England and Wales or Northern Ireland, and
(b)to the undertaking of an obligation under the law of Scotland,
as it applies to the making of a contract.
Cases considering section 51 (6)
[2026] EWHC 2175 (Comm) · 14 August 2026
Applies section 51(1) to hold that a contract purporting to be made for a company before incorporation operates against the person acting for it and cannot bind the later company. The remuneration agreement therefore did not bind the Defendant. (see paras [31]; [40])
[2025] EWHC 1258 (Ch) · 27 May 2025Interprets
Interprets section 51 as making a person purporting to contract for a company before formation personally liable unless the contract is novated or otherwise replaced. The company had no legal obligation to pay for the pre-incorporation work. (see paras [457]-[462])
[2024] EWHC 3227 (Comm) · 13 December 2024Limits
The court rejected the argument that section 51 could make a solicitor signing for a non-existent LLP the agent of a different LLP member. It found no basis in section 51 or agency law for the claimant to enforce the agreements on that footing. (see paras [71]-[73])
What each judgment says about section 51 is in the case-law panel in the full Act.
141.This section restates section 36C of the 1985 Act. A company is not bound by a contract purportedly made on its behalf before it came into existence unless the obligations are novated, i.e. a new contract must come into existence after incorporation on the same terms as the old one. Novation may be express or implied.