The following requirements must be adhered to in order for such transaction to be valid:

The contract must be in writing; legal and enforceable; the parties to the contract must have contractual capacity, there must be consensus between the parties, the parties must have the intention to enter into a contract. The person(s) entering into a contract on behalf of a company must act as agent or trustee of a company to be formed and the latter must be duly authorised by the board of directors by way of a resolution.

The memorandum and articles of association must contain as one of its objectives the ratification or adoption of the contract. The board of directors or shareholders must adopt or ratify the whole or part of the contract. Two copies of the contract (one certified by a notary public) must be lodged with the registrar of companies.

If a pre-incorporation contract is not ratified within three months after the company is incorporated, then it shall be deemed to be ratified. If the contract is rejected by the board of directors or if the company is not formed within the time stipulated in the agreement, the person signing the agreement on behalf of the company will be held personally liable in terms of the contract. If a contract is deemed to be ratified within three months after its incorporation, the contract becomes binding on the person and or the board of directors.

Reference List:

Ethics question paper 2018
Lead material 2017
Law Firms website