Illustrate Contract and the term Corporation

Question

Illustrate Contract and the term Corporation?

Answer 1

Contracts: A corporation can enter into contracts with third parties. Only duly appointed officers, employees, or agents may bind the corporation to contractual obligations. Unlike partners, who are agents of the firm, shareholders have no authority to enter into contracts on behalf of the corporation.

A corporation is a separate legal entity created for carrying on business. As an artificial person, a corporation has a continuous existence independent of the existence of its owners, and it has powers and liabilities distinct from its owners. As such, it is responsible for its own debts. It may enter into contracts, sue, and be sued. It can commit torts, such as negligence, or crimes. The corporate form of ownership is covered extensively in the next section.