44Liability of party to contract

44 Liability of party to contract (a) a person purports to enter into a contract as agent or trustee for a proposed incorporated association; and (b) the association is incorporated within a reasonable time after the person purported to enter into the contract but does not ratify the contract within a reasonable time after the association was incorporated; then, despite any rule of law or equity to the contrary, the person has no right of indemnity against the incorporated association in relation to the contract. (2) If a nonexistent incorporated association purports to enter into a contract and the association— (a) is not incorporated within a reasonable time after the contract is purported to be entered into; or (b) is incorporated within that time but does not ratify the contract within a reasonable time after being incorporated; the other party or each of the other parties to the contract may, subject to subsections (5) and (6), recover from the person or from any 1 or more of the persons who purported to execute the contract on behalf of the nonexistent incorporated association an amount of damages equivalent to the amount of damages for which the party could have obtained a judgment against the incorporated association if— (c) where the association has not been incorporated as referred to in paragraph (a)—the association had been incorporated and had ratified the contract under section 43 (1); or (d) where the association has been incorporated as referred to in paragraph (b)—the association had ratified the contract under section 43 (1); and the contract had been discharged because of a breach of the contract constituted by the refusal or failure of the incorporated association to perform any obligation under the contract. (3) If— (a) proceedings are brought to recover damages under subsection (2) in relation to a contract purported to have been entered into by a nonexistent incorporated association; and (b) the association has been incorporated; the court may, if it thinks it just to do so, make either or both of the following orders: (c) an order directing the incorporated association to transfer or pay to any party to the contract who is named in the order any property, or an amount not exceeding the value of any benefit, received by the incorporated association as a result of the contract; (d) an order that the incorporated association pay the whole or a specified portion of any damages that, in those proceedings, the defendant has been or is found liable to pay. (4) If, in proceedings to recover damages under subsection (2) in relation to a contract purported to be entered into by a nonexistent incorporated association, the court makes an order under subsection (3) (c), the court may refuse to award any damages in the proceedings, or may award an amount of damages less than the amount the court would have awarded if the order had not been made. (5) If— (b) the association is incorporated and ratifies the contract as provided for in section 43 (1); and (c) the contract is discharged by a breach of the contract constituted by a refusal or failure of the incorporated association to perform all or any of its obligations under the contract; and (d) the other party or any 1 or more of the other parties to the contract brings or bring proceedings against the incorporated association for damages for breach of the contract; the court may, subject to subsection (7), if it thinks it just to do so, order the person or any 1 or more of the persons who purported to execute the contract on behalf of the incorporated association to pay to the person or persons by whom the proceedings are brought the whole or a specified portion of any damages that the incorporated association has been, or is, found liable to pay to the person or persons by whom the proceedings are brought. (6) If a person purports, whether alone or together with another person or persons, to execute a contract on behalf of a nonexistent incorporated association, the other party to the contract, or any of the other parties to the contract, may, by writing signed by the party or parties, consent to the firstmentioned person or persons being exempted from any liability in relation to the contract. (7) If a person has, in accordance with subsection (6), consented to the exemption of another person from liability in relation to a contract that the other person purported to execute on behalf of a nonexistent (a) despite subsection (2), the firstmentioned person is not entitled to recover damages from that other person in relation to that (b) the court shall not, in proceedings referred to in subsection (5), order that other person to pay to the firstmentioned person any damages or proportion of the damages that the incorporated association has been, or may be, found liable to pay to that firstmentioned person.