The promoter's liability on pre-incorporation contracts terminates when a novation is signed.

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Novation is a process by which a new party takes over the obligations of a pre-existing contract, effectively replacing one of the original parties. In the context of pre-incorporation contracts, a novation can be used to transfer the promoter's liability to the newly formed company. Once a novation is signed, the promoter is released from their contractual obligations and the company assumes liability for any remaining obligations. Therefore, the statement "the promoter's liability on pre-incorporation contracts terminates when a novation is signed" is true.

The Promoter's Liability on Pre-Incorporation Contracts Terminates When a Novation