South Australian Consolidated Acts

CO-OPERATIVES ACT 1997 - SECT 56

56—Contracts before registration

        (1)         If a person enters into, or purports to enter into, a contract on behalf of, or for the benefit of, a proposed co-operative, the co-operative becomes bound by the contract and entitled to its benefit if the co-operative, or a co-operative that is reasonably identifiable with it, is registered and ratifies the contract—

            (a)         within a reasonable period after the contract is entered into; or

            (b)         within any period agreed to by the parties to the contract.

        (2)         The person is released from any liability under the pre-registration contract if the co-operative enters into another contract in substitution for it—

            (a)         within a reasonable period after the pre-registration contract is entered into; or

            (b)         within any period agreed to by the parties to the pre-registration contract.

        (3)         The person is liable to pay damages to each other party to the pre-registration contract if a co-operative is not registered, or a co-operative is registered but does not ratify the contract or enter into a substitute for it—

            (a)         within a reasonable period after the contract is entered into; or

            (b)         within the period agreed to by the parties to the contract.

        (4)         The maximum amount of damages the person is liable to pay to a party is the amount the co-operative would be liable to pay to the party if the co-operative had been registered and had ratified the contract and then completely failed to perform it.

        (5)         If proceedings are brought to recover damages under subsection (3) because the co-operative is registered but does not ratify the pre-registration contract or enter into a substitute for it, the court may do anything that it thinks just in the circumstances, including ordering the co-operative—

            (a)         to pay all or part of the damages that the person is liable to pay;

            (b)         to transfer property that the co-operative received because of the contract to a party to the contract;

            (c)         to pay an amount to a party to the contract.

        (6)         If the co-operative ratifies the pre-registration contract but fails to perform all or part of it, the court may order the person to pay all or part of the damages that the co-operative is ordered to pay.