Business Law Flashcards

Question 1

Q

what is the case law relevant to Invitation to Treat or Offer?

Answer

A

PSGB (Pharmaceutical Society of GB) V Boots Cash Chemists 1953

Contract of sale was not made when the customer selected goods, but rather, when they offered payment at the till

Question 2

Q

what is the case law relevant to Offer/Unilateral Contract

Answer

A

Carlill V Carbolic Smokeball Co 1893

Question 3

Q

what is the case law relevant to Acceptance

Answer

A

Felthouse V Bindley 1862

SILENCE does not constitute a contract – ‘if I hear nothing from you, I will assume that the horse is mine’

Question 4

Q

what is the case law relevant to Breach of Condition

Answer

A

Poussard V Spiers and Pond 1876

Singer unable to perform in relation to a contract to sing

Question 5

Q

what is the case law relevant to Breach of Warranty

Answer

A

Bettini V Gye 1876

Singer failed to attend some rehearsals, but was able to perform actual contract

Question 6

Q

what is the case law relevant to Silence

Answer

A

Felthouse V Bindley 1863

If I hear nothing from you, I will assume the horse is mine

Question 7

Q

what is the case law relevant to Exclusion Clauses (Incorporation)

Answer

A

Olley V Marlborough Court Hotel Ltd 1949

Terms cannot be entered into the contract after the fact, i.e. in this case, notification of the exclusion clause should be given to the hotel resident when they sign the register

Question 8

Q

what is the case law relevant to Exclusion Clauses (Validity

Answer

A

Photoproduction Ltd V Securicor 1980

Held to be valid even in the event of fundamental breach, where it has been properly incorporated, has been communicated, and is deemed to be fair

Question 9

Q

what is the case law relevant to Negligent Misrepresentation/Professional Negligence

Answer

A

Hedley Byrne V Heller 1963

A negligently prepared financial report was relied upon, to the plaintiff’s detriment.

Question 10

Q

what is the case law relevant to Tort of Negligence

Answer

A

Donoghue V Stevenson 1932

A duty of care was breached, causing loss. (NB: Foreseeability of damage is key here

Question 11

Q

what is the case law relevant to employment law - determining employment status

Answer

A

Ready Mixed Concrete v minister of Pensions (1968)

Determining employment status

Question 12

Q

what is the case law relevant to employment law - dismissal

Answer

A

Futty V Brekkes (1974)

Dismissal (wording, context to determine if actually dismissed)

Question 13

Q

what is the case law relevant to employment law - dismissal for lack of capability

Answer

A

James v Waltham Holy Cross UDC (1973)

Dismissal for lack of capability

Question 14

Q

what is the case law relevant to employment law - procedure for good practice in the redundancy process

Answer

A

Williams v Compair (1982)

Procedure for good practice in the redundancy process

Question 15

Q

what is the case law relevant to agency law - implied authority in the agency relationship

Answer

A

Watteau v Fenwick (1893)

Implied authority in the agency relationship

Question 16

Q

what is the case law relevant to consumer law - S17

Answer

A

Rowland v Divall (1923)

S17 Consumer Rights Act 2015 (Title

Question 17

Q

What is the case law relevant to consumer law - S11

Answer

A

Beale v Taylor (1967)

S11 Consumer Rights Act 2015 (Description – car was not as described

Question 18

Q

What is the case law relevant to consumer law - S9

Answer

A

Grant v Australian Knitting Mills (1936)

S9 Consumer Rights Act 2015 (Quality – garment caused dermatitis

Question 19

Q

What is the case law relevant to consumer law S10

Answer

A

Priest v Last (1903)

S10 Consumer Rights Act 2015 (Fitness for purpose – hot water bottle case

Question 20

Q

What is the case law relevant to consumer law S13

Answer

A

Godley v Perry (1960)

S13 Consumer Rights Act 2015 (Sale by Sample – faulty catapults

Question 21

Q

what is the case law relevant to company law - restraint of trade valid

Answer

A

Restraint of Trade (Valid)

Nordenfelt V Nordenfelt 1894

Will be held to be valid if a market needs to be protected (in this case, concerned the manufacture of guns and ammunition)

Question 22

Q

what is the case law relevant to company law - limited liability

Answer

A

Limited liability

 Salomon V Salomon 1897

Mr Salomon converted his business into a limited co.

The Co went into liquidation.

Salomon did not have to pay creditors as there was no intent to defraud

Question 23

Q

what is the case law relevant to company law - Lifting the Veil of Incorporation, Restraint of Trade clauses, fraudulent conduct

Answer

A

Lifting the Veil of Incorporation, Restraint of Trade clauses, fraudulent conduct.

 Gilford Motor Homes V Horne 1933 –

A former employee was bound by a restraint of trade.

An injunction was granted against him and his company.

The company was described as a ‘cloak or a sham’.

Question 24

Q

what is the case law relevant to company law - Improper conduct, non purchase of shares contrary to agreement, just & equitable reasons to wind up Co (Company Conclusion).

Answer

A

Improper conduct, non purchase of shares contrary to agreement, just & equitable reasons to wind up Co (Company Conclusion).

 Ebrahimi V Westbourne Galleries 1972 –

Mr Ebrahimi and Mr Nazar were in business.

Nazar brought his son into the business.

Ebrahimi was removed by way of vote.

Considered improper conduct.

Just and equitable to wind up company even though it was profitable

Question 25

Q

what is the case law relevant to company law - Directors, Best interests of the co, Undisclosed profit.

Answer

A

Directors, Best interests of the co, Undisclosed profit.

 Cook V. Deeks 1916 –

Contract made by trustees for their own benefit.

They had defrauded the shareholders.

Had to account for the profit

Question 26

Q

what is the case law relevant to company law - Validity of Partnership

Answer

A

Validity of Partnership

 Pawsey V Armstrong 1881 –

A partnership can be held to exist despite a declaration that no partnership relationship was to exist

Question 27

Q

what is the case law relevant to company law - Misappropriation of funds, binding the firm, removal of the partner.

Answer

A

Misappropriation of funds, binding the firm, removal of the partner.

 Blair V Bromley 1847

Solicitor misappropriated funds entrusted for investment in specific securities.

Deemed to be in the ordinary course of business.

Remaining partner liable

Question 28

Q

what is the case law relevant to company law -

Misappropriation, not binding the firm

Answer

A

Misappropriation, not binding the firm.

 Cleather V Twisden 1844

Partner disappeared with the proceeds from the payment of New Zealand bonds deposited with him for safe keeping.

This was outside the normal course of business.

Remaining partner not liable

Question 29

Q

what is the case law relevant to data protection

Answer

A

Data Protection

Vidall-Hall v Google (2015)

The right to hold personal information

Question 30

Q

what is the case law relevant to corporate offences and corporate governance - insider dealing

Answer

A

Corporate Offences& Corporate Governance

FSA v McQuoid (2009)

Insider dealing

Question 31

Q

list some grounds upon which a dismissal will be presumed to be automatically unfair, pursuant to the terms of the Unfair Dismissals Act 1977-2015

Answer

A

Unfair Dismissal Grounds:

any dismissal based on:

(1) pregnancy, childbirth,
leave for family reasons or other maternity related reasons,

(2) for requesting/taking
parental/paternity or adoption leave,

(3) taking time off for dependents,

(4) for
requesting flexible working hours,

(5) sought to exert statutory law protection,

(6) a
spent criminal offence,

(7) membership or proposed membership of a trade union,

(8)
an attempt to enforce a statutory right against an employer (e.g. attempt to receive
minimum wage),

(9) whistle blowing,
(10) absence due to jury service,

(11)
involvement in protected industrial action,

(12) pension enrolments,

(13) reasons
concerned with health and safety, or

(14) where the employer failed to follow the
dismissal and disciplinary procedures

Question 32

Q

what are the main remedies available for unfair dismissal as stated in The Employment Rights (NI) Order 1996

Answer

A

Remedies:

the available are:

(1) reinstatement –the employee is restored to the
same position of employment, with the same rights and conditions, under the same
employer as if he/she was never dismissed, or

(2) re-engagement – employee is
restored to employment under the same employer but in a different job role (the role
should be comparable to their previous position), or

(3) compensation the most
common remedy as usually there is a breakdown in trust between the parties making
reinstatement and re-engagement would not be appropriate. It requires the employer
to pay a sum of money to the injured party (in this case the unfairly dismissed
employee

Question 33

Q

in the context of employment law explain the meaning of the term redundancy

Answer

A

Redundancy:

redundancy is one of the “fair” reasons for dismissal of an
employee and is defined under The Employment Rights (Northern Ireland) Order
1996.

The Order states that an employee shall be taken to be dismissed by reason of
redundancy if the dismissal was wholly or mainly attributable to:

i. The fact that the employer has ceased or intends to cease –

i) to carry on the
business for the purposes of which the employee was employed; or

ii) to carry
on that business in the place where the employee was employed, or

ii. The fact the requirements of that business –

i) for employees to carry out work
of a particular kind; or ii) for employees to carry out work of a particular kind
in the place where the employee was employed, have ceased or diminished or
are expecting to cease or diminish

Question 34

Q

Outline the way in which statutory redundancy payments are calculated

Answer

A

Statutory Redundancy Payments: for each year of service worked by the
employee:

i. Half a weeks’s pay for each full year worked under the age of 22;

ii. A week’s pay for each full year worked when over the age of 22 but under the
age of 41;

iii. One and a half weeks pay for each full year worked over the age of 41

Question 35

Q

Define the meaning of the term personal data, under the terms of the Data Protection
Acts 1988-2018, and the General Data Protection Regulation

Answer

A

Personal Data:

this can be defined as any information that relates to an identified
or identifiable living individual (not a company

Question 36

Q

Describe the procedure that must be adopted by a data controller upon receipt of a
data subject access request (SAR).

Answer

A

Data Subject Access Request (SAR):

upon receipt of the request the following
obligations are imposed upon the data controller:

(1) they must verify the identity of
the person making the request by obtaining appropriate evidence,

(2) they must
undertake extensive efforts to find and retrieve the relevant information,

(3) data that
is relevant to the request should be communicated to the data subject in an intelligible
form, and a copy should be supplied in a permanent form (unless otherwise agreed or
where it would involve disproportionate effort),

(4) the data controller is required to
respond to the request within one month, and

(5) the data controller cannot charge the
data subject a fee for the provision of the data, unless the request is manifestly
unfounded or excessive in nature – in this situation the fee must be reasonable

Question 37

Q

Define the meaning of the term Data Controller

Answer

A

Data Controller:

this is defined as:

(1) any person who controls the content and
use of personal data, or

(2) determines the manner in which the data is to be processed,
and

(3) a data controller can be a person or a corporate body

Question 38

Q

. State any THREE functions of a Data Protection Officer

Answer

A

Functions of a Data Protection Officer:

these include

(1) informing and
advising Data Controllers and Processors of their obligations under the Regulation,

(2) monitoring compliance with GDPR in the context of policies, assignment of
responsibilities, raising awareness and training of staffing,

(3) providing advice
regarding Data Protection Impact Assessments,

(4) co-operating with the ICO, and
(5) acting as a contact point with the ICO on issues relating to processing

Question 39

Q

Explain any TWO differences between a Private Company Limited by Shares (LTD)
and a Public Limited Company (PLC

Answer

A

Differences Between an LTD and PLC:

these can be summarised as follows:

(1) Company Secretary: a PLC must have a recognised qualified company secretary
whereas there is no requirement for a LTD to have a company secretary,

(2) Capital:
a PLC must have a minimum issued share capital of £50,000 – 25% of which must
be fully paid, whereas an LTD does not have a minimum capital requirement,

(3)
Trading: upon receipt of the Certificate of Incorporation, a LTD can commence
trading – whereas a PLC can only trade upon receipt of both a Certificate of
Incorporation and a Trading Certificate,

(4) Transfer of Shares: a PLC can sell its
shares freely on the market – whereas there is a prohibition against offering shares to
the public in an LTD,

(5) Stock Market: a PLC can be listed on the stock market
whereas an LTD cannot,

(6) Registration: in a PLC the application for registration
must state that it is a public limited company, whereas in an LTD the application for
registration must state that it is a private limited company,

(7) Names: the name of a
PLC must end in the word PLC whereas the name of an LTD must end in the word
Ltd,

(8) Directors: a PLC is required to have a minimum of 2 directors whereas an
LTD can have a minimum of one director,

(9) Annual General Meetings: a PLC is
required to hold an AGM (within 6 months of the year end) whereas a LTD has no
such requirement

(10) Audits: a PLC cannot avail of an audit exemption, whereas an
LTD can avail of this exemption, where it meets the eligibility criteria

Question 40

Q

State the minimum capital requirement for a PLC

Answer

A

PLC Minimum Capital:

a PLC must have a minimum issued share capital of
£50,000

– 25% of which must be fully paid

Question 41

Q

In the context of company law, explain the meaning of the term separate legal personality
and its consequences

Answer

A

• Separate Legal Personality:

this concept means that a business has a separate legal
status from its members – and in reality has a distinct personality from the natural
persons who set up the business

– this concept was first recognised in the case of
Salomon v Salomon & Co Ltd (1897) and only applies to company (2 marks)

– this
separate personality means that a company:

(1) can own their own property,

(2) can
enter in contractual relations with either natural persons or other businesses in their
own name,

(3) be prosecuted or sued where a crime or tort is committed,

(4) can have
perpetual existence – the death, retirement, bankruptcy, insanity etc of the members
or officers will not impact the continuity of the company,

(5) the company can be
sued or sue other persons, and (

6) in addition, the members of the company are
entitled to limited liability for the debts of the company (where the company is
registered as a limited company)

Question 42

Q

Define the meaning of the term partnership.

Answer

A

Partnership:

as per Section 1 of the Partnership Act 1890 a partnership is the
relationship which subsists between persons carrying on a business in common with
a view to making a profit

Question 43

Q

List any THREE methods by which a contract of partnership may be terminated

Answer

A

Termination of a Partnership: this may arise in the following ways:

o (1) by law:

a) expiry of a fixed term agreement
b) attainment of objectives,
c) by retirement/notice of a partner,
d) by the death or bankruptcy of a partner,
e) by an intervening illegality that makes the continued existence of the
firm illegal,

o (2) by an Application to the Court (Section 35 of the 1890 Act) – this may be
granted where the partner:

a) is incapable of continuing as partner by reason of mental disorder,
b) Becomes permanently incapable of administering partnership affairs
c) is guilty of conduct prejudicially affecting the carrying out of
partnership duties
d) commits a breach of the partnership agreement or conducts themselves
in an unreasonable manner that other partners could not be expected
to continue to work with them
e) can only carry on the business at a loss
f) (e) where the Court considers it “just and equitable” to dissolve the
partnership

o (3) by agreement

– where the partners can unanimously agree to dissolve the
partnership, even prior to any fixed date stated in a partnership agreement

Question 44

Q

In the context of the law of agency, explain how an agency of necessity may arise

Answer

A

Agency by operation of law/ necessity:

this is where a contract of agency is implied
to exist in the event of extraordinary circumstances

– in effect, where an emergency
situation arises relating to the transportation of goods or where one person has
possession of another’s goods they may become an agent of necessity (1 mark)

– for
this to occur the following factors must exist:

(1) the agent must be entrusted with the
goods of the principal,

(2) an emergency must arise,

(3) the agent must attempt to
contract the principal to obtain instructions and be unable to do so, and

(4) the agent
must be acting in good faith and in the best interest of the principal & to protect the
principal’s interest – in these circumstances the Court will imply that you are acting
as an agent of necessity (any 3 = 3 marks)

– examples include:

Great Northern
Railway v Swaffield, 1874,

Sachs v Miklos (1948),

Springer v Great Western Railway
(1921)

Question 45

Q

A. Explain the characteristics of a partly-paid share

Answer

A

Partly-Paid Shares:

this is where shares are purchased, but the full nominal value
of the shares is not paid for upon subscription

– instead a portion is paid upon
subscription and the balance is due at a later date

– payment is then required at either
a pre-agreed future date/event or upon liquidation of the company (whichever arises
first)

Question 46

Q

State the distinction between authorised share capital and issued share capital.

Answer

A

Capital:

authorised capital – this is the total amount of capital that can be issued
by a company as stated in its Constitution

– whereas issued capital is the total amount
of capital issued by the company to date (stated in its declarations at formation, and
stated thereafter in the annual return)

Question 47

Q

Define the meaning of the term debenture.

Answer

A

Debenture:

this was defined in Levy v Abercorris State & Slab Co. (1887) as a
document that creates a debt or acknowledges it –

the debenture states the terms on
which the company has borrowed money and is issued by the company to the lender

– it will state the principal sum of money to be repaid and the sum of interest

– the
debenture gives the holder a series of safeguards and powers in the event that the
company defaults upon payment

Question 48

Q

. In the context of company debentures, discuss the characteristics of a floating charge

Answer

A

. Characteristics of a Floating Charge:

the main characteristics are:

(1) this is a
charge floats that over all or part of a class of assets both present and future that
change in the normal course of business,

(2) the company can trade freely with the
assets in the normal course of business without having to gain permission,

(3) the
assets which floating charges are attached to are usually more realisable assets (i.e.
sell more easily),

(4) in liquidation, floating charges crystallise and attach to the assets
over which they previously floated, and

(5) floating charges are only repaid after fixed
charges and preferential debts have been satisfied

Question 49

Q

Explain the various methods that can be used by a company to effect the appointment of
a director

Answer

A

Appointment of a Director:

these include the following:

(1) the “first” directors of
a company must be included in the application for registration submitted to the
registrar (minimum of 1 director for a LTD, 2 for a PLC)(1 mark),

(2) the procedure
for appointment of directors after the initial appointment is contained within a
company’s Articles of Association (2 marks),

3) in a PLC, all directors must retire
and may stand for election. The shareholders vote and directors will be elected on
the passing of an ordinary resolution (1 mark) At all further AGMs of PLCs, at least
one third of directors must retire.

Question 50

Q

Discuss any TWO fiduciary duties of a company director

Answer

A

Fiduciary Duties of a Company Director:

as per the Companies Act 2006:

o Duty to act within powers

▪ Two elements – to act within the powers as stated in the Constitution
and also to use the powers for their proper purpose
o

Duty to promote the success of the company

▪ A fundamental duty. The director should consider; the long term
impact of decisions made, the interests of employees, the need to
develop good relationships with customers and suppliers, the impact
decisions have on the community and environment, the desirability to maintain a reputation for high standards in business conduct and the
need to act fairly as between members of the company.

o Duty to exercise independent judgement

▪ Director should not delegate unless authorised to do so and should not
allow others to influence decisions

Question 51

Q

A. Small companies are audit exempt provided they comply with two or more
prescribed criteria.

State the various criteria applied in assessing whether a company
is entitled to claim an audit exemption.

Answer

A

Audit Exemption Criteria:

in order to obtain an audit exemption two or more of
the following requirements must be satisfied:

(1) the amount of the turnover of the
company does not exceed £10.2 million,

(2) the balance sheet total of the company
does not exceed £5.1 million,

(3) the average number of employees of the company
does not exceed 50,

(4) the company is not a public company, bank or insurance
company

(5) a dormant company is also eligible for an audit exemption, and

(6) a
non-commercial and non-profit making public sector body and its accounts are
subject to a public sector audit

Question 52

Q

Section 853B of the Companies Act 2006 requires every company to notify the
Registrar of Companies upon the occurrence of certain events.

Name two such
events

Answer

A

Events requiring notification:

(1) a change in the company’s registered office,
(2) a change in directors,
(3) a change in company secretary,

(4) a change in the
location of where company records are kept,

(5) a change in the company’s principal
business,

(6) a change in the register of persons with significant control,

(7) changes
in the company’s share capital or

(8) changes to how the company maintains details
of its shareholder

Question 53

Q

State the procedure to effect the removal of a statutory auditor

Answer

A

Removal of the Auditor:

an auditor may be removed from office by:

(1) an
ordinary resolution,

(2) requiring 28 days extended notice to members,

(3) a copy of
the notice must be sent to the auditor,

(4) the auditor has the right to make
representations and these should be circulated to members prior to the meeting, if not,
they should be circulated at the meeting

and () where a resolution is passed, notice
should be sent to the registrar of companies within 14 days

Question 54

Q

List THREE rights of an auditor

Answer

A

Rights of an Auditor:

(1) right of access at all times to the company’s books and
accounts,

(2) right to require relevant persons (company officers and employees) in
the company to provide them with the information required to compile their report,

(3) right to attend any general meetings of the company and to receive all notices and
communications regarding general meetings

(4) right to speak at the general meetings
on matters concerning the auditors

Question 55

Q

List any FIVE grounds upon which a company may be placed into compulsory
liquidation

Answer

A

Grounds for Compulsory Liquidation:

the statutory grounds for compulsory
liquidation are:

(1) the company is unable to pay its debts as they fall due,

(2) the
company has failed to commence trading within 12 months of formation or has failed
to trade in the last 12 months,

(3) if the number of members of the company fall below
the statutory minimum,

(4) if the court considers it just and equitable to have the
company liquidated,

(5) where the members have passed a special resolution for
compulsory liquidation,

(6) the company is a public company and has not been issued
with a trading certificate and more than 12 months has passed since its incorporation

Question 56

Q

Explain two purposes of administration

Answer

A

Purposes of administration:

the purposes of administration are:

(1) to enable the
company to carry on trading;

(2) to achieve a more advantageous result for the
creditors than would be achieved if the company went straight into liquidation

Question 57

Q

State one power of an administrator

Answer

A

Power of Administrator:

(1) the power to manage the affairs, business and
property of the company (including the power to dispose of company property and
bring or defend any legal action brought in the company name),

(2) the power to
remove a director or appoint a new director.

Question 58

Q

state one duty of an administrator

Answer

A

Duty of
Administrator:

(1) the duty to apply to the court for directions,
(2) the duty to comply with court directions,
(3) duty to act in the best interests of the company

Question 59

Q

Define the meaning of the term money laundering

Answer

A

Money Laundering:

this is the way in which criminals attempt to turn cash and
other assets obtained from criminal activities into genuine assets through the financial
services system and through established businesses

Question 60

Q

Describe any TWO of the main money laundering offences

Answer

A

Money Laundering Offences:

the offence requires honest belief and is define
where a person:

(1) conceals or disguises the true nature, source, location, disposition,
movement or ownership of criminal property,

(2) converts criminal property from one
form to another (e.g. cash into property),

or (3) transfers criminal property or removes
it from the UK or Northern Ireland

Question 61

Q

List any FIVE duties of a company secretary

Answer

A

Duties of a Company Secretary:

(1) maintaining the company’s statutory books,
including registers of; directors and secretaries (past and present), shareholders and
their shareholding (past and present), charges on company assets and debenture
holders. The secretary should also hold minutes of general meetings and board
meetings,

(2) filing annual returns to Companies House,

(3) arrange meetings of the
directors and the shareholders,

(4) inform Companies House of any significant
changes in the company’s structure or management,

(5) establish and maintain the
company’s registered office as the address

Question 62

Q

In the context of company capital, which ONE of the following statements is
CORRECT?

(4) A company is prohibited from issuing shares at a discount on their nominal value
(5) A company is prohibited from issuing shares at a discount on their market value

(6) A company is prohibited from issuing shares at a discount on their nominal and
market value

Answer

A

Company Capital:

the correct answer is A – shares cannot be issued at a discount
on nominal value

Question 63

Q

List any FOUR characteristics of a bond

Answer

A

Bond:

(1) these are financial instruments that can be issued by a company to an
investor,

(2) they represent a contractual loan by the investor to the borrower
(company) that yields an interest payable to the bond holder, resulting in the bond
holders being classed as creditors of the company,

(3) the bond instrument will
generally detail when the principal is repayable to the bond holder and will provide
for the payment of interest,

(4) they can be classified as tradeable securities in the
case of a PLC, and

(5) where these bonds are traded on the stock market they can
have a nominal or face value, as well as a market value, which can reflect the credit
rating of the issuer, amongst other factors

Question 64

Q

State the minimum number of directors required to establish a Private Limited
Company and a Public Limited Company.

Answer

A

Directors:

a PLC requires a minimum of two directors, whereas an LTD requires
a minimum of one director

Answer 65

A

Voluntary Director Resignation:

(1) Resignation (the company’s articles of
association will state the notice period required),

(2) retirement,

(3) period of
appointment expires and the director is not re-elected

Answer 66

A

Distinction:

Primary legislation is enacted by both Parliament and the NI
Assembly.

It is implemented in the form of Acts (e.g. The Companies Act 2006) or
in the form of Orders (e.g. The Employment Rights (NI) Order 1996.

Delegated
(secondary) legislation refers to laws passed by bodies (such as a government
Minister or a public or local authority).

This power is delegated to these bodies by
Parliament/NI Assembly who do not have the resources and/or time to implement
every new piece of legislation

Answer 67

A

. Advantages:

these include the following

(1) it enables the legislation to be passed
(and if necessary changed at a later date) more quickly, by avoiding the sometimes
slow and cumbersome process of Parliament/NI Assembly, and

(2) its allows experts
in the area of the legislation to be involved in making legislation

Answer 68

A

Definition of an Exemption Clause:

this is a clause in a contract that attempts to
exclude liability (total or partial) in the event of non-performance or a breach of
contract

Answer 69

A

Incorporation of an Exemption Clause:

this can arise in any of the following
ways:

(1) by signature: where the injured party has signed the contract containing an
exemption clause – if the injured party signs without reading the contract, the clause
will still be considered validly incorporated into the contract - L’estrange v Graucob
(1934) – it may also arise in an unsigned written contract, provided the notice is prominently displayed and the clause is not hidden amongst a mass of other printed
material,

(2) by reasonable notice: a party to a contract that contains an exemption
clause must be given reasonable notice of the clause either before or at the time of
entering the contract, not after – when determining whether reasonable notice was
given the courts will have regard to all the circumstances and take into account
factors, such as when the notice was given, what form the notice was given in and
how serious the effect of the limitation or exemption has on the injured party -
Chapelton v Barry Urban District Council (1940), Thornton v Shoe Lane Parking Ltd
(1971) or

(3) by a course of dealing: even if insufficient notice of the exemption clause
has been given, the courts may still determine that the clause is validly incorporated
if the parties have had previous dealings on a regular/consistent basis with each other
– Spurling Ltd v Bradshaw (1956), Rambler Motors (1972)

Answer 70

A

Misleading Commercial Practices:

this includes any misleading information
regarding the nature of the goods being purchased, including the:

(1) failure to
display prices,

(2) method of manufacture,
(3) origin of manufacture,

(4) the
quality/grade of the product,

(5) specification of the product,
(6) product ingredients,
(7) quantity of the product,
(8) the fitness for purpose of the product,

(9) risks
associated with using a product,

(10) trader must state all terms and conditions

Answer 71

A

Regulatory Authority:

The Department of Trade, Enterprise and Investment

Answer 72

A

Defence of Contributory Negligence:

(1) this is where a person contributes to their
own injuries by failing to exercise reasonable care in relation to their own personal
safety or the safety of their property,

(2) the Court views it as a breach of duty of care towards oneself,

(3) the defendant must establish that the plaintiff’s injuries were a
partial consequence of the plaintiff’s own behaviour.,

(4) the defence may also arise
by a failure to mitigate damages, such as in Jones v Livox Quarries (1952), and in
Froom v Butcher (1976) – and

(5) in allowing a defence of contributory negligence
the Court will take into consideration the age and experience of the person, as well as
the actions of a reasonable person – such as in Hegarty v Donegal County Council
(1998) and O’Reilly v Iarnrod Eireann (2002

Answer 73

A

Articles of Association of a DAC:

• Directors’ powers, decision-making and appointment:

• Rules in relation to the powers of directors, appointment and retirement,
disqualification and removal and the power to delegate

• Shares, dividends and capitalisation of profits

• Rules on transfer of shares and rules in relation to payment of interim and final
dividends to shareholders

Decision-making by shareholders
Rules in relation to attendance and proceedings at general meetings
Voting at general meetings
Rules on voting at meetings and proxy voting
Administration arrangements

• Rules in relation to change of company address and rights of their documents
to be inspected

• Directors indemnity and insurance

• Details of the company’s power to grant indemnities to directors as per the
Companies Act 2006

Answer 74

A

Notice:

the requisite notice period required of a meeting at which a special
resolution is proposed is 14 days

Answer 75

A

Ordinary Business of an AGM:

this includes the following business:

(1)
consideration of the accounts,

(2) consideration of the Director’s and Auditor’s
reports,

(3) declaration of a dividend,

(4) retirement by rotation and re-election of
Directors, and

(5) re-appointment/appointment of the Auditor

Answer 76

A

Employee’s Rights on Redundancy:

(1) the right to statutory minimum notice,
(2) the right to time off during notice period and

(3) the right to be individually
informed

Answer 77

A

Fair Selection Criteria:

an employer must utilise an independent selection
criteria, such as:

(1) last in first out – wherein the most recently hired employees are
made redundant,

(2) skills required and qualifications of workers – this usually
involves psychometric testing of employees,

(3) productivity/performance – provided
there is a proper mechanism for assessing this,

(4) attendance and disciplinary records
(provided people with disabilities are not discriminated against), or

(5) absence and
time keeping records (provided they are accurate on not based on pregnancy or
discriminatory reasons

Answer 78

A

Constructive Dismissal:

this is where the employee terminates the contract under
which they are employed because of the conduct of the employer

– the conduct of the employer must be sufficiently serious as to entitle the employee to resign from
their employment (1 mark) –

in this instance the onus lies on the employee to prove
that what has happened amounted to a dismissal

Answer 79

A

Fundamental Breach of Contract:

this test considers whether the actions of the
employer are in breach of their fundamental contractual obligations to their
employees, and generally arises where the employer has effected a unilateral
alteration of the employment contract (2 marks)

– examples of actions that may be
considered a fundamental breach of contract include:

(1) changes to employee’s pay
– such as a reduction in pay even by a small amount or the non-payment of
employee’s tax and PRSI payments,

(2) change in hours of work – or to the shift
pattern, unless the employer has a contractual right to do so,

(3) change in the location
of the employment – assuming that the contract does not contain a mobility clause,

(4)fundamental change in status or change in duties,

(5) failure to provide safe system
of work and comply with legislation,

(6) employer’s conduct towards employee, or

(7) failure to make the workplace employee friendly – such as failure to implement
a ‘no smoking’ policy or failure by an employer to make reasonable adjustments to
a workplace for an employee suffering with a disability

Answer 80

A

Criminal Offenses:

(1) in responding to an information notice from the
Commissioner, make or recklessly make, a statement which is known to be false in
material respect,

(2) to destroy or otherwise dispose of, conceal, block or (where
relevant) falsify all or part of the information, document, equipment or material,

(3)
knowingly or recklessly obtaining, disclosing or producing personal data without the
consent of the data controller, and the sale or offering for sale of that data, and

(4) to
alter, deface, block, erase, destroy or conceal information with the intention of preventing disclosure to individuals requesting disclosure of their personal data.

Answer 81

A

Reporting Breaches:

the correct answer is (3) – a significant breach must be
reported within 72 hours

Answer 82

A

Rights of the Data Subject:

these include the following:

(1) the right to information
when personal data is collected,

(2) the right to establish whether personal data is
being held,

(3) the right of access to their personal data,

(4) the right to have personal
data corrected or erased, where appropriate – this specifically encompasses a right to
be forgotten (de-listed),

(5) the right to restriction of processing, including a right not
to be subject to a decision based on profiling,

(6) the right to data portability, and

(7)
the right to object to disclosure of data to third parties

Answer 83

A

Partnership Definition:

The Partnership Act 1890 defines a partnership as “the
relationship which subsists between persons carrying on a business in common view
of profit”.

Usually, small businesses or groups of professionals form
partnerships (e.g accountants and solicitors

Answer 84

A

Filing Obligation:

A partnership is not considered a company and is therefore
not regulated by Companies House.

Therefore, there is minimal legal regulation of
partnerships and their only obligation is to file their tax return years to the tax
authority

Answer 85

A

Characteristics in Common:

(1) Registration – all companies must apply to be
registered with the Companies Registry and have a “Certificate of Incorporation”,

(2)
Regulation – all companies are governed by the Companies Act 2006 and other
company legislation,

(3) Separate Legal Entity – all companies have their own
separate legal identity distinct from their owners,

(4) Liability – all companies
members have limited liability,

(5) Publicity – all companies must make certain
information available to Companies House each year, and

(6) Management – all
companies are owned by members and controlled by directors

Answer 86

A

Partnership Agreement/Deed of Partnership:

this generally includes the following
terms:

(1) the nature of the firm’s business, the name of the firm and its principal
place of business,

(2) the capital and property of the firm and the proportion in which
it is contributed by each partner,

(3) the date of commencement and the intended
duration of the partnership,

(4) provision for the payment of salaries, if any, to the
partners,

(5) rights, obligations and duties of each individual partner i.e. the legal
relationship between the different partners,

(6) provision for audits and accounts,
partner drawings, partnership meetings,

(7) division of profits and losses,

(8) the
procedure to be adopted on the death, retirement or bankruptcy of a partner,

(9) the
procedure for the valuation of the goodwill and assets on the sale of the partnership
or on the death of a partner,

(10) provision for the dissolution of the partnership,

(11)
provision for the admission of an additional partner or the expulsion of an existing
partner, and

(12) an arbitration clause setting down the procedure to be used in solving
disputes

Answer 87

A

Rights attached to Preference Shares:

these include the following:

(1) the right to
a fixed dividend payment. This payment is cumulative meaning that if the company
does not release a dividend, the arrears carry forward and are paid as a priority when
the next dividend is declared (2 marks),

(2) right to a return on capital investment in
priority to ordinary shareholders on the winding up of a company (but after all
external creditors are paid) (2 marks), and

(3) a right to attend company meetings but
not the right to participate or vote

Answer 88

A

Characteristics of an Ordinary Share:

these include the following:

(1) ordinary
shareholders are the main risk takers in the company as they bear the burden of the
company’s fortunes and they are the last to be paid upon the liquidation of the
business,

(2) ordinary shareholders are generally only paid dividends following
payment to the preference shareholders,

(3) ordinary shareholders are paid a variable
dividend, which varies in accordance with the profit/performance of the company –
this right is not cumulative), and

(4) ordinary shares are generally voting shares and
these shareholders can influence company policy by exercising voting rights at
general meetings (AGM/EGM) relating to company business

Answer 89

A

Types of Shares:

the correct answer is (3) – a redeemable share may be issued as
such, but may also arise from conversion

Answer 90

A

Disqualification Order:

this is the process by which a person is disqualified, for
a specific period, from becoming a director of a company, or directly or indirectly
being concerned or taking part in the promotion, formation or management of a
company without leave of the Court. (2 marks)

There is a minimum of 2 years
and a maximum of 15 years

Answer 91

A

Shadow Director:

a shadow director is a person in accordance with whose
directions or instructions the directors of a company are accustomed to act

– this
person does not take the title of director and remains in the background of a
company, but they instruct and direct the board of directors as to how to act in
relation to company matters

– consequently they have the exact same liability as a
properly appointed de jure director

Answer 92

A

Loans to Directors:

a company cannot make a loan to a director or to a person
connected to the director unless the loan has been approved by the passing of a
resolution by the members of the company at a meeting

Answer 93

A

Permissible Exceptions:

members approval is not required, where the loan is to
cover:

(1) expenditure to cover business expenses provided value is less than £50,000,

(2) expenditure on defending any criminal or civil proceedings brought against a
director,

(3) expenditure related to any action taken against a director by a regulatory
authority or

(4) an amount of less than £10,000

Answer 94

A

Maintenance of Accounting Records:

a company is under a duty to keep up to
date accounting records sufficient to:

(1) show and explain the financial transactions
of the company,

(2) disclose with reasonable accuracy at any time, the financial
position of the company,

(3) enable the directors to ensure that any accounts required
to be prepared comply with the requirements of the Companies Acts

Answer 95

A

Period of Maintenance:

a company must maintain accounting records for a
period of 6 years too which they relate

Answer 96

A

Auditor’s Opinions:

the auditor must give an opinion on the following:

(1) whether
or not the annual accounts give a “true and fair view” of the financial state of the
affairs of the company,

(2) whether or not the accounts are properly prepared in
accordance with the relevant financial reporting framework,

(3) whether or not
proper accounting records have been kept and returns adequate for their audit have
been received from branches not visited by the auditor,

(4) whether or not the
company’s individual accounts correspond with the accounting records and returns,
and

(5) whether or not the information contained in the directors remuneration report
is consistent with the account

Answer 97

A

Effects of Administration:

(1) no steps can be taken by anyone to wind up the
company,

(2) the company cannot start a process of voluntary winding up, or

(3) no
legal proceedings can be brought against the company by a creditor

Answer 98

A

Appointment of Administrator:

the following persons can apply to the court to
appoint an administrator to a company:

(1) the company members (by resolution),

(2)
the company directors and

(3) a creditor of the company (e.g. floating chargeholder)

Answer 99

A

Duties of an Administrator:

the main powers and duties of an Administrator are
contained in Articles 27 & Article 29 as amended by the Insolvency (Northern
Ireland) Order 2005:

(1) the power to manage the affairs, business and property of the
company,

(2) the power to dispose of the company property,

(3) the power to bring
and defend any legal action in the company name,

(4) the power to remove or appoint
a director,

(5) the duty to apply to the court for directions,

(6) the duty to comply with
any court directions, and

(7) the duty to act in the best interests of the company

Answer 100

A

Inside information:

this can be defined as confidential information – and

(1)
information that is specific or precise,

(2) information that has not yet been made
public,

(3) information that relates to the issuer of the securities or the securities
themselves,

(4) information, that if made public, would likely have a significant effect
on the price of the securities to which the information relates to

Answer 101

A

An Insider:

by virtue of Section 57 of the 1993 Act, a person has inside
information as an insider if and only if:

(1) it is, and he knows it is, inside information
and

(2) he has it, and knows he has it, from an inside source

Answer 102

A

Summary Dismissal:

this is a dismissal without notice and is generally unlawful and
gives the employee a right to claim wrongful dismissal (1 mark)

– it is only
permissible where the employer can prove that the conduct of the employee was
sufficiently serious so as to justify a dismissal without notice, relevant case law
includes Wilson v Racher (1974) (2 marks)

– the right generally only arises where
the employee has engaged in an act of serious or gross misconduct, or gross
negligence (1 mark)

– even if this arises the employer is obliged to follow fair
procedures in these circumstances (but is not required to apply the warning system)
before effecting this dismissal

Answer 103

A

Characteristics of a Fixed Charge:

(1) this is where a company borrows money
and secures that borrowing on a fixed asset,

(2) this charge attaches to a fixed asset
from the moment of creation,

(3) thereafter the borrowing company cannot deal in the
asset (sell, alter, use to create a further charge) without the consent of the chargeholder,

(4) this charge ranks in priority to other charges, and

(5) it is usually created
by means of either a legal or equitable mortgage (lender’s beneficial interest in the
property is registered on the title documents/or the lender takes possession of the title
documents until the debt is repaid)

Answer 104

A

Registration of Charges:

as per the Companies Act 2006, the borrowing
company must register the fixed charge with the Registrar at Companies House within
21 days of the creation of the charge,

(2) the court will grant leave to allow a company
register a charge after 21 days in certain circumstances,

(3) the Registrar will issue a
certificate giving details of the charge registered and enters the charge on the
company’s register (which is available to the public and potential lenders will usually
examine this register),

(4) if the company fails to register the charge, it will be void
against the liquidator and any creditor of the company. The loan must be repaid in
full immediately and

(5) the company must keep a register on their premises of all
fixed and floating charges (may be liable for a fine for failing to do so)

Answer 105

A

Data Protection Impact Assessment:

this is a systematic and extensive evaluation
of the data processing operations of a data controller, in order to access whether these
operations are in compliance with the Data Protection Acts 1998-2018 and the
General Data Protection Regulation

– and to identify any weaknesses or deficiencies
in their systems (2 marks) – the information in a DPIA includes:

(1) a description of
the envisaged processing operations and the purposes of the processing,

(2) an
assessment of the necessity and proportionality of the processing operations,

(3) an
assessment of the risks to the rights and freedoms of data subjects, and

(4) details of
the measures envisaged to address the risks, including safeguards, security measures
and mechanisms to ensure the protection of personal data and to demonstrate
compliance with the Regulation, taking into account the rights and legitimate interests
of data subjects and other persons concerned

Answer 106

A

High Court:

(1) Queen’s Bench Division – actions in tort and contracts with a
value of over £30,000,

(2) Chancery Division – equity matters such as land, trusts,
bankruptcy, winding up proceedings and other company law matters, and

(3) Family
Division – complex family law matters such as divorce, custody and adoption

Answer 107

A

Small Claims Court:

this court hears matters where the value of the claim is less
than £3,000.

The court is designed so that it is not necessary to have a solicitor to
represent you.

Examples of cases that are heard in the Small Claims Court are;

compensation for faulty goods, compensation for unsatisfactory services and tenancy
disputes

Answer 108

A

Postal Rule:

the effect of the postal rule is that an offer is accepted when (date
and time) and where (place) the letter of acceptance is posted and not when it is
received

Answer 109

A

Termination of an Offer:

an offer may be terminated in any of the following
ways:

(1) by rejection,
(2) by revocation or withdrawal prior to acceptance,

(3) by
counter-offer,

(4) by unreasonable lapse of in time between offer made and
acceptance, or

(5) death of one of the parties

Answer 110

A

Sale by Sample:

There is a duty imposed on the trader that when a sale is made
on the basis of a sample:

(1) the goods that arrive must correspond with the sample in
quality and be free of defects,

(2) the buyer is given a reasonable opportunity to
compare the sample with the bulk of goods, and

(3) if the sample and bulk are both
defective, the trader may be liable if on reasonable examination of the sample, it
would not be apparent that the goods were defective

Answer 111

A

Remedies:

(1) the injured party may have the right to repudiate the contract
and/or claim damages for any loss suffered as a result of the breach,

(2) the injured
party may be granted “specific performance” where damages are an insufficient
remedy

Answer 112

A

Neighbour principle:

this doctrine means you are liable for your negligent acts
to your neighbour

– this is defined as a person so closely and directly connected to
you that you should have them in mind as affected by your acts or your acts of
omission (including words)

Answer 113

A

Modern Day Test/Three-Tier Test:

as per Caparo Industries Plc v Dickman
(1990) the following factors apply:

(1) was the harm reasonably foreseeable,

(2) was
there a relationship of proximity between the parties Swinney v Chief Constable of
Northumbria Police (No2)(1999), and

(3) considering the circumstances, is it fair, just and reasonable to impose a duty of care, Hill v Chief Constable of West Yorkshire
(1988

Answer 114

A

Information for Company Registration:

(1) the company name,

(2) a UK registered
office address,

(3) details on what the company plans to do – the activities of the
business,

(4) details of the share capital to be created,

(5) details of company
director(s),

(6) initial shareholding details

Answer 115

A

Voting at Meetings:

the general rule is that it takes place first by a show of hands,
wherein every member gets one vote

– and a result is declared by the chairperson of
the meeting

– this declaration is deemed conclusive (2 marks) –

Another method is
by a poll.
The main difference is that a poll allows the members to cast the number of
votes equivalent to their shareholding.

A poll can only be demanded by:

(1) not less
than 5 members who have a right to vote on the resolution,

(2) a member or members
with at least 10% of the voting share, or

(3) members holding shares not less than
10% of the total paid up on the share capital

Answer 116

A

Fair Procedures:

at a minimum an employer must

(1) set out in writing the employee’s
alleged conduct,

(2) send the statement to the employee and invite the employee to attend a
meeting to discuss the matter,

(3) not take any dismissal action prior to the meeting taking
place,

(4) allow the employee to bring a colleague or union representative to the disciplinary
meeting,

(5) not hold the meeting until the employee has received the letter, understands it
and has reasonable opportunity to consider their response to it,

(6)after the meeting, notify
the employee of their decision, and

(7) notify the employee of their right to appeal against the
decision taken

Answer 117

A

Importance of the Distinction:

(1) statutory protection is only afforded to employees
not to independent contractors,

(2) an employer is vicariously liable for the actions of
employers but not generally independent contractors,

(3) en employee has priority of payment
over an independent contractor in the event of the liquidation of a company,

(4) an employee
may obtain social benefits (health insurance, pension, training, education etc) from an
employer that are not accessible to a contractor,

(5) the social welfare code distinguishes
between an employee and a contractor for the purpose of benefits, and

(6) the tax code
distinguishes between an employee (PAYE) and a contractor (self-assessed)

Answer 118

A

No Right to Arrange for a Substitute Test:

the Court considers that under a contract of
service, that the dominant obligation to provide a “personal service” is a key ingredient.

If a
person can delegate or substitute the work, the Court usually determines that the contract is a
contract for service.

Hitchcock v Post Office (1980), Staffordshire Sentinel Newspaper Ltd v Porter (2004).

It is important to note that despite being the dominant obligation, there are
times when it is reasonable to arrange a substitute e.g. a care worker arranging a substitute to
cover annual leave

as in Chatfield-Roberts v Phillips & Universal Aunts Limited (2019

Answer 119

A

Legal Basis for Processing:

there are six legal bases for processing pursuant to the Data
Protection Acts 1988-2018 and the General Data Protection Regulation, as follows:

(1)
consent: the customer must be give actual consent or can opt-in to receiving marketing emails,

(2) legal obligation: such as a legislative obligation to retain data,

(3) vital interest: such as in
an emergency situation,

(4) legitimate interest: where it is deemed necessary in the
circumstances,

(5) performance of a contract: where it is absolutely necessary for completion
of a contract, and

(6) public interest: such as the Office for National Statistics carrying out
the census

Answer 120

A

Data Protection Infringement and Offences:

certain infringements under the GDPR
are punishable by a fine of up to €20m(or sterling equivalent), or 4% of total worldwide
annual turnover of the preceding financial year,

whichever is the greater

Answer 121

A

ICO Fines:

Before issuing a fine, the ICO must be satisfied that

(1) the violation was
serious, and

(2) the violation was likely to cause substantial damage or distress, and, either
(3) the violation was deliberate or

(4) the Data Controller knew that (or should have known)
that a damaging or distressing violation was possible but failed to take any reasonable steps
to prevent it.

Answer 122

A

Sole Trader:

this is a person who owns and runs their own business (whether with or
without employees) (1 mark)

– examples of sole traders usually include local newsagents or
professionals, such as accountants or solicitors

Answer 123

A

Disadvantages of a Sole Trader:

these include the following:

(1) a lack of separate legal
existence,

(2) no perpetual existence,
(3) unlimited liability for the debts of the business,

(4)
limited access to capital,

(5) sole decision-making responsibility,

(6) limited access to
expertise etc …

Answer 124

A

Companies Limited by Guarantee:

these are companies where no capital is invested at
formation,

instead the members guarantee to contribute a fixed amount of money in the event
of the company being liquidated

– this type of company does not have a share capital and it
has members (not shareholders)

Answer 125

A

PLC: the correct answer is (2)

– a PLC may not be limited by guarantee

Answer 126

A

Limited Partnership:

A limited partnership consists of

(1) one or more people who are
liable for all debts and obligations of the firm. These are called general partners (2 marks),
and

(2) one or more people who contributes a sum or sums of money as capital, or property
valued at a stated amount and whose liability for the debts/obligations of the firm do not go
beyond this amount.

These are known as limited partners

Answer 127

A

. Minimum Partners:

there is a minimum requirement of two partners

Answer 128

A

Types of Partner:

(1) General Partner – actively involved in the day to day running and
financial management of the business.

(2) Sleeping Partner – invested capital and has a right
to a share in the profits (and liable for any loses). However, they are not actively involved in
the day to day running of the business and the public are generally unaware of this “sleeping”
partner.

(3) Limited Partner – liability for debts of the business are limited to a fixed amount.
This type of partner cannot exist in ordinary partnerships, only in a limited or limited liability
partnership

Answer 129

A

Priority of Payments on Liquidation:

these are as follow:

(1) the costs of liquidation
(liquidators fees and expenses),

(2) fixed charge holders ,

(3) preferential creditors (e.g.
employee salaries),

(4) debentures secured by floating charges ,

(5) unsecured creditors (e.g
Inland Revenue),

(6) members dividends that have been declared but not yet paid, and

(7)
shareholders (first preference, then ordinary)

Answer 130

A

Share Premium:

where a company issues shares above their par nominal value (at a
premium) the nominal value is lodged to the issued capital account and the excess in value,
which is known as the share premium (profit above nominal) must be lodged into the share
premium account

Answer 131

A

Share Premium Account:

the money held in the share premium account can only be
utilised in the following ways:

(1) to write off the expenses related to the issue of those shares,
(2) to write off the commission paid on the issue of those shares, or

(3) to pay up new shares
to be issued to members as bonus shares

Answer 132

A

Removal of a Director:

(1) a director can be removed from office by the passing of an
ordinary resolution at a general meeting,

(2) special notice of 28 days or more must be served
by the company on the shareholders indicating the intention to remove the director

Answer 133

A

Rights:

(1) a copy of the resolution proposing to remove the director must be given to the
director concerned,

(2) the director has a right to make written representations and have them
circulated by the company to all the members before the general meeting,

(3) if the
representations are not sent they must be read out at the general meeting, and

(4) the director
has the right to speak at the meeting

Answer 134

A

Executive Directors:

these are directors who are involved in the operational management of
the business

– they provide continuous attention to the affairs of the business

– they are more
often an employee, for example, managing director

– they usually hold important positions
within the day to day running of the business

Answer 135

A

Non-Executive Directors:

these are directors appointed to manage the business on a
transient basis

– they are more involved in strategic management at board level, not involved
in the operational running

– they are appointed due to their expert knowledge, experience,
attainment or skills

– their role is to act as monitors of the executive directors (by ensuring
that they are acting within their powers and the companies objectives) and to provide the
board of directors with additional expertise and an objective view point

Answer 136

A

Auditor Liability:

an auditor is obliged to act with due care and skill to the company i.e.
to the shareholders as a whole.

This care of duty does not extend to third parties who have no
relationship with the auditors Caparo Industries Plc v Dickman (1990).

The level of duty to
be exercises was stated in Re Kingston Cotton Mill (No 2) (1896) - the role of the auditor is
to act as a watchdog and not a bloodhound.

Courts expect auditors to exercise a reasonable
standard of care and skill in carrying out their duties.

Auditors who fail to do so may be found
liable and expected to pay damages for loss suffered

Answer 137

A

B.

Secretary Experience:

the correct answer is B

Answer 138

A

Object of an Audit:

The object of an audit was summarised in Formento (Sterling Area)
Ltd v Selsdon Fountain Pen Co Ltd (1988) as:

(1) the necessity of an independent person to
verify the accuracy of the accounts,

(2) to make checks to establish that the accounts do not
hide any errors and dishonesty, and

(3) to confirm that the accounts reflect the true financial
position of a company

Answer 139

A

Statement of Circumstances:

When an auditor is removed from office, he should submit
a statement of circumstance stating that either;

(1) that there are no circumstances that the
auditor believes that should be brought to the members or creditor attention, or

(2) that there
are circumstances that the auditor believes that should be brought to the members or creditor
attention and describe these circumstances.

The statement should be sent to every person
entitled to receive a copy of the company accounts.

An auditor who fails to submit a statement
is guilty of an offence and liable to a fine

Answer 140

A

Creditors Voluntary Liquidation:

(1) a company unable to make a declaration of solvency
because of insolvency must initiate a creditors’ voluntary liquidation,

(2) the members of the
company will pass a special resolution to the effect that the company cannot by reason of its
liabilities carry on with its business,

(3) the company must then call a meeting with the
creditors within 14 days of the resolution being passed to commence a creditors’ voluntary
winding up,

(4) notice of the creditors’ meeting must be sent to all the creditors at least seven
days before the meeting and also be advertised in the Belfast Gazette and at least two other
newspapers circulating in the area,

(5) at the creditors meeting the directors must lay before
it a statement of affairs showing particulars of the company’s assets, debts and liabilities,

(6)
at the meeting, a liquidator will be appointed and all the powers of the directors will cease.
•
• (7) the creditors may also appoint a liquidation committee to communicate with the
liquidator on behalf of the creditors (usually 3 or 5 members on the committee).

The
committee will monitor the liquidator and his exercise of his powers in winding up the
company

Answer 141

A

Company Voluntary Arrangement:

A CVA is an alternative to liquidation
proceedings.

The aim of a CVA is to allow a company to come to a mutual agreement with
all its creditors regarding the payment of its debts over a period of time

Answer 142

A

When a CVA can occur:

A CVA can occur in three scenarios:

(1) an administrator
can propose a CVA during administration,

(2) a liquidator can propose a CVA as a
company is being wound up, or

(3) the directors of a company can propose the CVA at
any time

Answer 143

A

Fraudulent Trading:

Section 933(1) CA 2006 defines fraudulent trading; “if any
business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who is knowingly
a party to the carrying on of the business in that manner commits an offence”. (2 marks) –

examples include:
siphoning-off company assets, using company assets for personal
purposes, keeping two sets of books of account (Re Aluminium Fabricators Ltd (1984)

Answer 144

A

Sanctions:

for a summary (minor conviction) – imprisonment for up to 6 months and/or
a fine.

For an indictable (serious) offence – imprisonment for up to 10 years and/or a fine

Answer 145

A

Types of Debentures:

these include a

(1) Single Debenture – this document will consist of a
single loan made between the company and the lender – the lender may be a bank providing
a long term overdraft facility to the company (1 mark),

(2) Series of Debentures – this
consists of a series of separate loans made on different dates by different lenders to the
company – each of these loans comprises a part of an overall loan and each debenture in the
series ranks equally in their right to security and repayment (2 marks), and

(3) Debenture
Stocks – this loan is used by public companies only – where instead of a company creating a
series of separate debentures as above, a company will create debenture stock

– this stock
creates a loan fund, which a number of lenders (the public) will invest money in on exactly
the same terms and conditions as stated in the debenture document – the terms of the
borrowing are set out in a single Trust Deed

Answer 146

A

Public Limited Company:

these include the following:

(1) a PLC requires a minimum
of 1 shareholder – there is no maximum threshold,

(2) a PLC must have a minimum issued
share capital of £50,000 – 25% of which must be fully paid,

(3) a PLC can only trade upon PLC must have an AGM, and

(9) in a PLC the application for registration must state that it is
a public limited company
receipt of a trading certificate,

(4) a PLC can sell its shares freely on the market,

(5) a PLC
can be listed on the stock market,

(6) a PLC must have a minimum of 2 directors and a
recognised qualified company secretary,

(7) a PLC cannot avail of an audit exemption,
(8) a PLC must have an AGM

Answer 147

A

B.

PLC’s:
the correct answer is

(1), a PLC cannot be limited by guarantee

Answer 148

A

Substantial Property:

a substantial property is a non-cash asset with a market value that
exceeds £100,000

or 10% of the company’s net asset value and is over £5,000

Answer 149

A

Loans to Directors:

members approval is not required if the loan is to cover:

(1)
expenditure to cover business expenses provided the value is less than £50,000,

(2)
expenditure on defending any criminal or civil proceedings brought against a director,

(3)
expenditure related to any action taken against a director by a regulatory authority, or

(4)
approval is not required where the value is less than £10,000

Answer 150

A

Standard of Proof:

in criminal cases the standard of proof is that the judge or jury must
be convinced of the guilt of the accused beyond all reasonable doubt,

whereas in civil cases
the judge must believe that the defendant is liable based on the balance of probabilities

Criminal Penalties:

these include:

(1) a fine,
(2) a term of imprisonment,

(3) a probation
order, or

4) a community service orders

Answer 151

A

Methods of Contractual Discharge:

this may arise by

(1) performance of contractual
obligations,

(2) agreement, supported by consideration,

(3) notice, as per the terms of the
contract, subject to legislation, and what the Court considers reasonable,

(4) breach of a
contractual condition (actual or anticipatory), and

(5) operation of the law, or
(6) frustration

Answer 152

A

Damages:

Hadley v Baxendale (1854) recognises two types of loss;

(1) direct loss, and
(2) consequential loss.

Only damages that can be reasonably foreseen can be claimed.

Parties
cannot be compensated for all of the loss suffered as some of the loss will be considered “too
remote” from the breach.

The court will apply the reasonably foreseeability test to determine
if a loss is “too remote). Victoria Laundry v Newman Industries (1949)

Answer 153

A

Aggressive Practice:

this is defined as a practice that:

(1) reduces a customer’s freedom
to make their own choice,

(2) causes them to make a different economic choice, and

(3) any
practice that uses harassment, coercion, or undue influence to create a contract

Answer 154

A

Factors: in determining whether a practice is aggressive the Court takes into
consideration:

(1) the language used by the trader (such as threatening or coercive language),

(2) the timing of the contract (such as where a door-to-door sales person calls late at night
and refuses to leave until a consumer makes a purchase),

(3) the location of the contract
(such as selling timeshares and transporting consumers to off-site locations where pressured
selling tactics are used), and

(4) the tactics used by the trader (such as failing to comply with customers request to cease unwanted communications, or staff at funeral homes putting
pressure on relatives of the recently bereaved to buy a more expensive coffin as a mark of
respect

Answer 155

A

Standard of Care:

the defendant is expected to apply a certain minimum standard that is
ascertained by application of the “reasonable man test”.

This test was developed in Blyth v
Birmingham Waterworks (1856) which defined negligence as

“the omission to do something
that a reasonable man… would do… or doing something that a prudent and reasonable man
would not do…”

Answer 156

A

B. Factors:

in determining whether a reasonable man would act in a certain manner the
Court review the following factors:

(1) the probability of the accident,

(2) the gravity of the
threatened injury,

(3) the social utility of the defendant’s actions – the motivation behind the
defendants conduct may be a factor in determining negligence, and

(4) the cost and
practicalities of eliminating the risk

Answer 157

A

Trading Certificate:

The trading certificate will be issued to a public company when
the Registrar is satisfied that the company meets the minimum statutory requirements
for share capital of a public company.

A public company must have £50,000 allotted
share capital with at least 25% (£12,500) of this sum fully paid up by the members.

A
public company should receive this certificate within one year of incorporation.

Answer 158

A

Certificate of Incorporation:

this document contains:

(1) the name and registered
number of the company,

(2) the date of incorporation of the company,

(3) details as to whether
the company is limited by shares or guarantee,

(4) details as to whether the company is private
or public,

(5) the location of the company’s registered office and

(5) the signature of the
Registrar and official seal of the company registry

Answer 159

A

Quorum:

(1) this is the minimum number of people that must attend a meeting in order
for it to be valid,

(2) a company’s quorum is generally stated in its Articles of Association,

(3) the Companies Act 2006 states that the minimum quorum is 2 persons (unless the
company is a one member company),

(4) the quorum may be present in person or by proxy,

(5) the quorum should be present 30 minutes before the meeting begins otherwise the
chairperson should adjourn the meeting

Answer 160

A

Minutes:

the correct answer is

(3) – the company secretary is responsible for maintaining
the minutes of company meetings, which must be kept at the registered office of the company

Answer 161

A

a contract is a legally enforceable agreement entered into voluntarily by two or more parties

it consists of rights and obligations that each party must perform and failure to perform such may very well result in a breach of contract and the right of a party to sue for damages

Answer 162

A

an important principle of contract law is that parties are free to enter into any contract on whatever terms they chose

there is some restriction to this freedom in that the legislation will imply certain terms into a contract regardless of whether you agree to them or not

Answer 163

A

in a bilateral contract each party undertakes an obligation, there is an exchange of promises between the parties

Answer 164

A

in a unilateral contract, only one party undertakes an obligation

one party promises to pay the other a sum of money if the other will do something in return

the other party does not make any promise to that effect, there is no obligation on anyone to accept the offer

Answer 165

A

there must be agreement (offer and acceptance) between the parties to contract

the terms of the contract must be expressed with a degree of certainty

the parties must possess the intention to create legal relations

the parties must have exchanged consideration

the parties must have capacity

Answer 166

A

it is made up of an offer made by 1 party and an acceptance of this offer by the other party

the courts must be satisfied that both a valid offer and valid acceptance are present when determining whether an agreement exists between the parties

Answer 167

A

an expression of willingness to contract on certain terms and conditions with the intention that if accepted, it shall become a binding contract

Answer 168

A

an invitation by 1 party to make an offer

a sort of offer to make an offer

Answer 169

A

it must be unqualified

it must be communicated to the offeror

Answer 170

A

rejection or counter-offer made by the offeree

unreasonable lapse of time between offer made and acceptance

revocation or withdrawal of the offer by the offeror

death of one of the parties

before performance in a unilateral contract

Answer 171

A

an agreement can only be valid if the parties to the agreement have the capacity to enter into contractual relations

there are 3 main categories of persons that the law states do not have the full contractual capacity to enter into a contract and thereby require the protection of the law if they do enter into contracts to which they may be bound

minors

mental incompetents

drunkards

Answer 172

A

executed consideration can be defined as a promise for an act

a promise is made by one party for an act to be performed by the other party

when the contract is performed the contract is executed

Answer 173

A

executory consideration can be defined as a promise for a promise

this means that parties exchange commercial context promises to perform acts in the future

Answer 174

A

consideration must be sufficient but need not be adequate

consideration must not be past

consideration must move from the promise (i.e. must pass between parties)

consideration must be more than what the party already has to do

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