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Promoters entering contracts before the company exists are personally liable, because such contracts are:
AProvisional accounts
BPreferential accounts
CPreliminary contracts
DPermanent contracts
Answer & Solution
Correct answer: C. Preliminary contracts
1. The company cannot ratify them.
2. It may sign fresh contracts instead.
3. These are preliminary contracts.
_Source: NCERT Class 11 Business Studies, Chapter 7, Formation of a Company._
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