corporations. As a result, only the corporation third party-and not the promoter-have liability on the of a share subscription, a SmithStearn Yachts, Inc. v. Gyrographic Communications, Inc. 2006 Conn. Super. LEXIS 1927 (June 23, 2006) SmithStearn Yachts, Inc., a Delaware corporation providing luxury yachting services in Connecticut, agreed to a contract with Gyro- graphic Communications, Inc., a California company, by which Gyrographic would provide advertising, marketing, and promotional services to SmithStearn. When SmithStearn sued Gyrographic for breaching the contract, Gyrographic countered that SmithStearn was not a party to the contract because the contract was purportedly made with a limited liability company SmithStearn Yachts LLC, not the corporation that was suing Gyrographic Rodriguez, Judge such contracts or by receiving the benefits from them. Although Leathern Stearn, the purported promoter and president of Smith- Smith Stearn Yachts. Inc. was formed after the execution of the Stearn Yachts, Inc., executed the agreement with Gyrographic agreement, it received the benefit of the services pursuant to the on behalf of SmithStearn, LLC, an entity that never came into agreement. Gyrographic worked toward developing letterheads, existence. Rather, the plaintiff. SmithStearn Yachts. Inc. [, ] was business cards, and other marketing material for SmithStearn formed. SmithStearn Yachts, Inc. contends that it has standing to Yachts, Inc. SmithSteam Yachts, Inc, made payments to Gyro- bring this action because it assumed and ratified, both explicitly graphic, which SmithStearn Yachts, Inc. then recorded in its and implicitly, the agreement that was made on its behalf, prior books. Thus, SmithStearn Yachts. Inc. received the benefits of to its formation. the agreement and also fulfilled the obligations under it. thereby Generally, a corporation is not bound by contracts entered into ratifying the agreement. on its behalf prior to its existence. A corporation can, however, Furthermore, ratification, adoption, or acceptance of a pre- acquire rights and subject itself to duties with respect to preincor- incorporation contract by a promoter need not be expressed, poration matters. A contract made in the name of an inchoate cor- but may be implied from acts or acquiescence on the part of the poration can be enforced after the corporation is organized on the corporation or its authorized agents. Thus, a corporation's act of principle of ratification. Ratification is defined as the affirmance by suing on a preincorporation contract is in itself an adoption of the a person of a prior act which did not bind him but which was done contract. SmithStearn Yachts. Inc. implicitly ratified the agree- or professedly done on his account. Ratification requires accep ment when it brought this action. By suing under the agreement. tance of the results of the act with an intent to ratify, and with full Smith Stearn Yachts, Inc. is also assuming the liabilities under it. knowledge of all the material circumstances. thereby enforcing and adopting the agreement. A corporation may after its organization become liable on pre- liminary contracts made by its promoters by expressly adopting Motion to dismiss denied in favor of SmithStearn Yachts, Inc. to buy a specific number of the corporation's shares at a Promoters have no liability on preincorporation share stated price. Under the MBCA, a prospective shareholder subscriptions. They have a duty, however, to make a good may not revoke a preincorporation subscription for a six- faith effort to bring the corporation into existence. When month period, in the absence of a contrary provision in a corporation fails to accept a preincorporation subscrip the subscription. Generally, corporate acceptance of prein- tion or becomes insolvent, the promoter is not liable to the corporation subscriptions occurs by action of the board of " disappointed subscriber, in the absence of fraud or other directors after incorporation. wrongdoing by the promoter