Companies Act 2006, section 51

Pre-incorporation contracts, deeds and obligations

Part 4 A company's capacity and related matters

(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.

Definitions used in section 51

company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
undertaking

(1) In the Companies Acts“undertaking” means—

(a)a body corporate or partnership, or

(b)an unincorporated association carrying on a trade or business, with or without a view to profit.

Defined in s.1161(1) · see it in the full Act

Cases considering section 51 (6)

Stuart William Evans & Ors v JNP Group Consulting Engineers Limited

[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])

Argyle UAE Limited (in liquidation) v Robert McKellar & Anor

[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])

Milford Investments Limited v Lanyon Bowdler LLP

[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.

Explanatory note

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.

All the explanatory notes for the Act

Amendments and notes

3 notes from legislation.gov.uk

Modifications

  1. C102S. 51 applied (with modifications) (1.10.2009) by The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (S.I. 2009/1804), regs. 2, 7
  2. C103S. 51 applied (with modifications) (1.10.2009) by The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (S.I. 2009/1917), reg. 6 (with Sch.)
  3. C104S. 51 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 3(g) (with transitional provisions and savings in regs. 7, 9, Sch. 2)