Business and Contract Flashcards
When will there be NO presumption to create legal relations?
When the parties are related. But the further relatives they are, the weaker the presumption.
When is a shareholder protected by limited liability?
When their shares are fully paid.
When is the postal rule excluded by an offer?
When the offeror indicates that they need to hear acceptance by a particular date.
What must be included in an application to register a company?
The memorandum of association.
The articles only need to be included if the model articles are not being adopted.
Are partners required to manage a business?
No. They can play a less active role in managing a business than other partners.
What is the nominal value of shares?
The original value of the shares when they were issued.
Note: most questions have shares issued at a pound each.
Can limited partners participate in management?
Partners in a limited partnership (not a limited liability partnership) cannot participate in management if they want to retain limited liability.
Are shareholders personally liable to each other?
Yes. Statute provides that members of a company are in a contract with each other. An infringement of a member’s rights would allow them to sue an individual member.
What is the difference between a unilateral and a bilateral contract?
A unilateral contract is a promise in return for an act, as opposed an exchange of promises.
When is acceptance of an offer via email deemed to be communicated?
During working hours but outside lunch time.
What sort of language deems the terms of a contract too vague?
‘On Hire Purchase’
‘On Standard Industry Terms’
When is a contract binding for a minor?
When it is a contract for necessaries or a contract of service that is more favorable than not to the minor.
What constitutes mental incapacity to enter a contract?
An inability to understand the terms of the contract which the other party is aware of.
When does a partner continue to be liable after retirement?
If they fail to give actual notice to people they are in business with or are held out as if they are still part of the partnership.
Can you claim the arrears for lessened rent? Do you have to give notice?
If you agree to reduce rent until an event, you have no right to the full rent before that event happens. After the event happens, you can claim for the full rent by giving reasonable notice.
How can a partner leave or be added to a partnership?
Unless an agreement states otherwise, a partner can only be removed from or added to a partnership through unanimous agreement of ALL the partners (including the partner being removed).
When can a past act amount to consideration?
If the act was done at the other party’s request, there was mutual understanding that the act would be rewarded and there is a general presumption to create legal relations.
What sort of tax do partners pay?
Partners pay income tax on the income profits of the partnership.
When is part payment of a debt sufficient consideration?
Only if you pay early.
If you pay early, you gave consideration for the promise to accept half-payment.
Is a promise to do something consideration?
Yes.
When does a partner have apparent authority?
The other party does not know that the partner doesn’t have authority AND the transaction is one which a partner would be reasonably expected to have authority to make.
Can a partner set up a competing business after leaving a partnership?
Yes. They are only restricted from competing while still partners.
Does the short term right to reject and receive a refund apply to B2B?
No.
When is a term referred to as a ‘condition’ not treated as a condition in the legal sense?
When neither party intended for it to be a condition in the legal sense.
When will exemption clauses be void?
If they exempt liability for negligence that causes death or personal injury.
If they exempt liability for breaches of implied terms of SGSA and SGA or express terms and are NOT reasonable.
Which factors affect the reasonableness of exemption clauses?
Bargaining strength.
Options available.
Awareness of the exemption clause.
What classifies as ‘regular and consistent’ course of dealings?
More than one previous contract.
Can someone sue a manufacturer if they were sold a faulty item by a third party (a seller)?
They can only sue them for negligence. Not for damages in contract as they do not have a contract with the manufacturer.
Are any terms implied into contracts that are C2C?
No. Just B2B and B2C.
Who can request the directors to call a general meeting?
Any shareholder or shareholders together holding more than 5% of the voting shares.
Do members not attending a meeting count in the % of a vote?
No. They must be present or appoint a proxy to count in the vote.
What is a simple majority?
More than 50%.
Who can request a poll vote of one vote per share?
A single shareholder with 10% or more of the shares or two shareholders or a director or the chair of the meeting.
Who cannot vote on a transaction they are interested in?
Directors cannot.
Shareholders can.
What is the notice required for each type of meeting?
Reasonable notice for a board meeting.
14 clear days for a shareholder meeting.
What is needed for a ‘general’ shareholder meeting to be held on short notice?
The agreement of shareholders holding at least 90% of the voting shares.
What do you need to be a Person with Significant Control (PSC)?
MORE than 25% of shares. Exactly 25% is not enough.
Who has a casting vote?
The chair of the board of directors.
What requires a special resolution of the shareholders?
Disapplying pre-emption rights.
Changing the name of a company.
Amending articles.
What is the lapse period of a written resolution?
28 regular days.
What requires an ordinary resolution of the shareholders?
Removing auditors.
Removing a director (with 28 days of notice) which MUST be board meeting.
Giving a director a long term service contract which is GUARANTEED to last more than two years.
A substantial property transaction with a director or a person connected to them.
Loaning more than 10k to a director personally.
Ratifying a director’s breach.
Giving directors authority to allot new type of shares.
What is a substantial property transaction?
Any transaction with a director worth more than 100k or more than 5k and 10% of net assets.
For emails and letters, when does the clock start for the 14 clear days after a general meeting is called?
48 hours after the notice is sent or posted.
What is the minimum number of directors at a board meeting?
2.
Do holidays and weekends count in 14 ‘clear’ days for the purpose of a general meeting?
Yes. All days count.
When do pre-emption rights not exist?
When the consideration for the shares being allotted is something other than cash.
When can a company loan money to a director?
When the director will use the money to buy something used for business. Otherwise, an ordinary resolution is required.
When is a shareholder meeting not required?
When every single shareholder agrees on something - there is unanimous agreement.
Can a board appoint a new director?
Yes.
When will a company classify as ‘connected to a director’?
When the director or someone connected to them owns 20% of the shares of the company.
What must be filed at companies house upon removal or appointment of a director?
Just the relevant form.
What must be filed at companies house upon a change of name?
Resolution and form (notice) and fee.
Do shareholders at a meeting abstaining count in the % of the vote?
No.
Are contracts entered into by minors void or voidable?
Voidable only at their option.
When does a third party have a right enforce a promise under a contract?
Only if the contract explicitly intended for this to be possible. Express provisions of otherwise exclude this right.
What is the consequence of a board of directors making a SPT without obtaining shareholder approval?
When is it ok if a director voted to ratify their breach?
If the vote would have passed regardless of their vote.
Can someone continue to make a derivative claim after a breach of a director’s duty has been ratified?
No.
Can a written resolution be used to remove a director?
No. They have the right to defend themselves and so a board meeting is required.
