Business law I Business medium

Question 1

Define veil of incorporation

Answer 1

Only the company itself is responsible for any debts to creditors. The shareholder’s liability is limited to their capital contribution

Question 2

Meaning of ‘joint and several’ liability in the case of a partnership

Answer 2

that a creditor can pursue all or any of the partners for the outstanding debt

Question 3

Explain a floating charge

Answer 3

A floating charge is a charge over the present and future asset that are to be retained in the business (inventory). Such a charge is useful to give a lender enhanced security over and above a fixed charge over immovable assets

Question 4

Who can create a floating charge

Answer 4

Sole trader and general partnership cannot create a floating charge whilst the rest can.