Massachusetts courts require that the parties expressly create a(n) _____ before a corporation can be held liable for preincorporation contracts.

Question

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When a corporation comes into existence, it is not automatically liable on the contracts made by the promoter. Nevertheless, all American courts, except those of Massachusetts, have held corporations liable if, after incorporation, the board acts to adopt the contract. Massachusetts, however, requires that the parties expressly create a novation before the corporation can be held liable for the preincorporation contracts.

Massachusetts Courts Require That the Parties Expressly Create A(n) _____