Corporations are generally organized by persons knnow as promoters. The function of a promoter has been thus described:

"The word 'promoter' has not yet a legal definition, but is a business term familiar in corporate finance. A promoter, in business practice, is one who seeks fields for investment in new enterprises, or in the extension or diversification of established industries, and, for a consideration, forms and organizes a corporation to develop the particular field he has chosen. The promoter commonly attends to everything connected with the floating of an enterprise. In the first place, he finds an enterprise with prospects of good returns on the money to be invested; he employs technical experts in the line of industry to prepare the figures of cost and prospective returns, so he and those to be interested with him may know as exactly as may be what they have and what they may expect; he prepares a prospectus based on the expert's figures; he secures legislation, where that is necessary; he secures options and leases, where they must be secured. In short, he 'assembles,' the proposition. Then he employs a corporation lawyer to prepare the articles of incorporation and secures the necessary subscribers to the articles, sees that the articles are recorded and filed, that the certificate of incorporation is issued, and pays the incorporation costs; he sells the stock of the company directly to the public, or to bankers or other underwriters whom he has usually provided for before organizing the corporation, and ordinarily he takes his own profit out in stock. His relation to the corporation is fiduciary. The promoter has to create value to entitle him to profit. He provides a new or original means of making money, and makes the means productive through the development of a 'going' concern for the utilization of that means."5

5 Wood on Modem Business Corporations, pp. 15-16.

A promoter is not an agent for the corporation, because the principle is not yet in existence. Such corporation can, therefore, only become liable for the contracts made by the promoter by ratifying them. Promoters are themselves liable on all previous contracts either as partners, or as individuals, according to the terms of their agreement. Promoters are liable on an action of deceit for any fraudulent representations.