Starting a business involves many moving parts. Sometimes, entrepreneurs act fast — signing office leases, vendor contracts, or purchase agreements before the company is even incorporated. These are called pre-incorporation contracts.

But what happens if you can’t get the company name you used in that contract?

Let’s break it down.

🧾 What Is a Pre-Incorporation Contract?

A pre-incorporation contract is any agreement made:

  • Before the company is legally formed, and
  • In the name of the intended company (e.g., “GreenTech Solutions (Pvt) Ltd”).

These contracts are perfectly legal as long as the company is incorporated later, and the contract is ratified (officially accepted) by the company after registration.

🚨 Problem: Company Name Not Approved

Sometimes, the Registrar of Companies may reject your proposed name because:

  • It’s too similar to another registered company
  • It contains restricted words like “President,” “Sri Lanka,” or “Bank”
  • It’s misleading or reserved

If the name gets rejected, you’re forced to incorporate under a different name.

But the contract you signed still says:
“This agreement is entered into by GreenTech Solutions (Pvt) Ltd”

Now you’ve incorporated as:
“GreenTech Innovations (Pvt) Ltd”

So… what now?

⚖️ Legal Issue: Who’s Bound by the Contract?

Until the company ratifies the contract, you (the person who signed it) are personally liable.

And if the exact company named in the contract doesn’t come into existence, there’s a legal gap.

So, unless the new company is clearly identified as a substitute, the contract:

  • Can’t be ratified under the original terms
  • May be considered void or unenforceable
  • May bind you personally to fulfill the terms

📘 Real-Life Example

Imagine this scenario:

  1. You sign a lease agreement in the name of “Urban Bean Café (Pvt) Ltd” for a 2-year term.
  2. The Registrar rejects that name.
  3. You incorporate as “Urban Brew Café (Pvt) Ltd.”
  4. You try to ratify the lease.

The landlord may say:
“This isn’t the company I signed the lease with.”
They could cancel the lease — or worse — sue you personally if you’ve already taken possession.

💡 How to Prevent This

✅ 1. Use a General Description

Instead of writing the exact name, use:

“A company to be incorporated by [Your Full Name], under the Companies Act No. 07 of 2007.”

✅ 2. Include a Name Flexibility Clause

In your contract, add:

“This agreement shall remain valid even if the final registered name of the company differs from the name stated above.”

✅ 3. Add a Ratification Period

Mention clearly:

“The company shall ratify this agreement within 30 days of incorporation.”

This gives legal breathing room even if you need to resubmit the name.

🛑 What If You Already Signed Without These Clauses?

If the contract:

  • Names a company that doesn’t exist
  • And no clause allows for flexibility

Then legally:

  • The contract cannot be ratified
  • You may personally be liable for damages or performance
  • The other party can refuse to proceed with the contract

In such cases, your best option is to:

  • Negotiate a new contract under the correct company name
  • Or seek legal redress if the other party won’t cooperate

📌 Final Takeaway for Business Owners

Choosing your company name is not just a branding decision — it’s a legal one.

If you’re entering into contracts before incorporation, always assume the name might be rejected. Build in clauses that protect your business and reduce your personal risk.

🛡️ When in doubt:

✅ Use flexible wording
✅ Mention who is forming the company
✅ Include ratification timeframes
✅ Get legal review

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