.James Jones and Sandra Smith have decided to open a sporting goods store as co-owners. On September 1, they met to discuss how to begin the business.

James told Sandra that a friend of his, Peter Property, had offered to lease a great store location for $1,000/month, but Peter needed an answer by the next day because he had another potential lessee. Sandra told James, "That sounds great. You go ahead and take care of it."

Sandra then told James, "My friend Laura Lawyer, who's an attorney, says we probably should incorporate the business." James and Sandra immediately called Laura and Laura told them she would be happy to do the work for free.Laura said, "I'll have the articles of incorporation to you in two days and I'll file them as soon as you approve them. Once I do that, you'll have a corporation." They told her to go ahead and to call the corporation Sports, Inc.

The next day (September 2), James met Peter and signed a contract to lease the store space for $1,000/month. He signed the contract: "Sports, Inc., by James Jones." Before signing, James told Peter the corporation was not yet formed.Peter said, "That's O.K. Don't worry about it."

On September 4, James and Sandra received the articles of incorporation from Laura. They told Laura to file the articles and she did so that same day, in a state that has adopted the latest version of the Revised Model Business Corporation Act.

The articles named James and Sandra as the initial directors of the corporation. On September 5, James and Sandra held an initial directors' meeting. They authorized the sale of stock to themselves for $5,000 each and adopted a resolution approving and accepting corporate liability on the lease contract.

Discuss whether James and/or Sandra are personally liable on the lease contract with Peter. (Do not discuss veil-piercing.) (20 points)