Lifting the Veil and Pre-incorporation Contracts
Lifting the veil
Courts start from Salomon and lift only exceptionally: enemy character (Daimler Co Ltd v Continental Tyre and Rubber Co), fraud or sham, agency where the company is a mere façade, group enterprise (DHN Food Distributors v Tower Hamlets LBC, a minority approach), and statutory contexts (fraudulent trading, directors' personal liability for prospectus misstatements, tax and competition statutes). Adams v Cape Industries shows judicial reluctance.
Pre-incorporation contracts
CAMA 2020, s.72: a contract purporting to be made by or on behalf of a company before incorporation is not binding on the company, but the company may ratify it within a reasonable time and then becomes bound. Until ratification the person who purported to act on the company's behalf is personally liable (Kelner v Baxter (1866) LR 2 CP 174; Phonogram Ltd v Lane [1982] QB 938). Ratification may be express or by conduct.
Worked example
Bola, a promoter, signs a lease "for and on behalf of Zenith Ltd (in formation)". Zenith is incorporated, moves in and pays rent for six months, then refuses further rent. The landlord sues Zenith and, in the alternative, Bola. Zenith has ratified by conduct (occupation and payment), so it is bound; Bola's personal liability falls away once ratification occurs. If Zenith had never ratified, Bola would be personally liable, and the landlord could not sue Zenith.
Traps
Assuming the company is automatically bound on incorporation; confusing ratification with novation; forgetting the promoter's personal liability; citing veil-lifting cases as if they overrule Salomon generally.