May Phillips was the principal promoter of the Waterloo Corporation, a corporation that was to have been incorporated not later than July 31. Phillips obtained written subscriptions for a total of $1.4 million of common stock from 17 individuals. She hired herself as the chief executive officer of Waterloo at $200,000 for 5 years and leased three floors of office space from Downtown Office Space, Inc. The contract with Downtown was made in the name of the corporation. Phillips had indicated orally that the corporation would be coming into existence shortly. The corporation did not come into existence, through no fault of Phillips. Which of the following is true?
A. The subscribers have a recognized right to sue for and recover damages.
B. Phillips is personally liable on the lease with Downtown.
C. Phillips has the right to recover the fair value of her services rendered to the proposed corporation.
D. The subscribers were not bound by their subscriptions until the corporation came into existence.
Answer: B. Phillips is personally liable on the lease with Downtown.
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