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Model Paper 2 — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesModel Paper 21 Mark
MCQ
Preliminary Contracts are:
  • A
    binding on the company
  • B
    binding on the guarantor
  • C
    not binding on the company
  • D
    binding on the promoters
✓

Answer

(C) not binding on the company
Explanation:
Preliminary contracts are contracts entered into by the promoters on behalf of the company before its incorporation with third parties. Such contracts are legally not binding upon the company even after it comes into existence.

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