When does a promoter remain liable for a contract if the corporation is never formed?

A promoter remains liable for a contract if the corporation is never formed until a novation occurs. A novation involves the substitution of a new party for the original party in a contract, with the consent of all parties involved. In the context of corporate organization, once the corporation is formed, it must formally agree to take over the promoter's obligations under the contract through a novation, which releases the promoter from liability.

If the corporation is never formed, the promoter remains personally liable for any contracts they entered into while attempting to create the corporation. This is because, without a corporation, there is no entity that can assume the contract, leaving the promoter as the liable party.

The other options are less accurate. If a corporation is formed but not a novation occurs, the promoter is still accountable. Therefore, liability does not simply cease upon the formation of the corporation depending on the specific circumstances of the contract and whether it has been assumed or transferred. Promoters are not entirely free from liability in the absence of a corporate entity or an agreement relieving them of such responsibility.