Company A (which markets computer software) and company B (which runs a computer training college)

enter into an agreement to form a new company, company C. Company C is to provide onsite computer

training for retail businesses that use company A's software. Shirley (a director of company A) and Laverne

(a director of company B) are authorised by the boards of directors of their respective companies to, as a

matter of urgency, take whatever steps are necessary to form company C and to secure training contracts

on its behalf.

Shirley and Laverne instruct solicitors to register a company. More quickly than they anticipate, they

manage to attract a large training job from company Y. Purportedly on behalf of company C, they execute a

contract with company Y. They have told the company Y representatives that company C is not yet

registered. The parties agree to include a clause that provides that if company C (or a company reasonably

identifiable with it) is not

Registered within two months of the date of the contract, then company Y can rescind the contract.

Consider these facts in the light of each of the following scenarios and questions.

Assume company C is registered a month after the contract is executed. What steps must Shirley and Laverne take to ensure that:

The contract with company Y is binding on company C; and

Neither of them is personally liable for the actions of company C under the contract.