FLK1 Mock Points to Note

Question 1

Business

What two resolutions are required when the directors propose to issue a new class of shares?

Answer 1

1. Members’ ordinary resolution to give the directors the power to allot the new class, and
2. Members’ special resolution to change the articles to include the new share rights.

Question 2

Business

Is a partner’s salary a component of the partner’s share of the profits?

Answer 2

Yes, inclusive

Question 3

Business

Do the directors need shareholder authorisation to:

1. Sell property
2. Sell property to a shareholder
3. Sell property to a director?

Answer 3

1. No
2. No
3. Yes, if it is a substantial property transaction

Question 4

Business

What are the two measures for a substantial property transaction?

Answer 4

1. Greater than 10% net assets and exceeds £5k, or
2. Exceeds £100k by itself

Question 5

Business

What are the lookback periods and the insolvency presumption periods for a transaction at an undervalue regarding an insolvent (1) company and (2) individual, and what should this not be confused with?

Answer 5

Transaction at an undervalue lookback period is:
1. 2 years for a company, whether connected or not, and
2. 5 years for an individual.

Insolvency is presumed if transaction is to a connected person for full amount of company lookback, and 2 years of the individual’s lookback, i.e. 2 years for both.

Don’t get confused with the different lookbacks for connected and not connected regarding a preference (6 months generally; 2 years if connected).

Question 6

Business

After the issue of shares, what must the company file and within what time period?

Answer 6

A company must file a Return of Allotment of Shares form within one month of the issue of shares

Question 7

Business

After appointment of the director, what must the company file and within what time period?

Answer 7

The company must file an Appointment of Director form within 14 days.

Question 8

Business

What is required where the directors wish to disapply pre-emption rights, and why does this not require amending the articles if the model articles are in use?

Answer 8

Members’ special resolution is needed merely to give them the power to disapply pre-emption rights.

There is no need to change the articles if the model articles are in use, because the model articles do not contain pre-emption rights, which come from statute.

Question 9

Business

Under the model articles, are there any exceptions to a director’s power to refuse a transfer of shares?

Answer 9

No, the power is absolute, even where the transfer is to an connected party or even an exisiting shareholder, the director can stil refuse

Question 10

Constitutional

Are UK courts bound by judgments made by the CJEU after the end of the transition period if those decisions relate to retained EU law?

Answer 10

No. They may follow them, but they are not required to

Question 11

Constitutional

What is the ECtHR’s discretion under the living instrument approach?

Answer 11

ECtHR may follow previous decisions, but it is not required to if circumstances have changed since that decision was made

Question 12

Contract

Whilst equity will enforce a promise to accept delayed or different performance, and the person accepting is free to change their mind, what must be true of the notice to change their mind?

Answer 12

The notice must be reasonable from a timing perspective

On the facts, consider whether the party left it too late to change mind

Question 13

Contract

Why is any answer choice suggesting a clause is (automatically) void under UCTA wrong?

Answer 13

Under UCTA, contracts are subject to the reasonableness test and not automatically void

Question 14

Contract

What is required for the Contracts (Rights of Third Parties) Act 1999 to extend an exclusion of liability clause in a contract between A and B to a third party?

Answer 14

The third party must be mentioned in the contract, either personally, or as part of a described class, e.g. “my contractors”, and there needs to be a second general contract between B and the third party for there to be privity between the three parties.

Question 15

Contract

Whilst mistake will be available where there is a mistake as to the existence of subject matter, mistake as to what will generally not give rise to the defence?

Answer 15

Mistake about quality or characteristics, e.g. value, or classic/vintage status

Caveat emptor

Question 16

Contract

Why will lack of agreement on price not prevent the formation of a contract?

Answer 16

The Sale of Goods Act 1979 obliges the buyer to pay a reasonable price which will be deemed to insert this term into the contract where missing.

Question 17

Contract

What must be shown for a non-compete clause to not be void for illegality as a restraint of trade?

Answer 17

Clause is reasonably necessary to protect the employer’s legitimate interests

Similar to justiftication for indirect discrimination under Equality Act

Question 18

Contract

Where a service is not of the expected standard, what does the remedy depend on?

Answer 18

Whether the claimant if a consumer or business

Question 19

Contract

Where a service is not of the expected standard, what is the remedy when the claimant is (1) a consumer and (2) a business?

Answer 19

Consumer:
Automatic right to rectify the problem under CRA 2015

Business:
Remedy will be based on breach of the implied term that services will be carried out with reasonable care and skill under the Supply of Goods and Services Act 1982.

Question 20

Contract

What is the effect of failing to correct a statement of fact after something occurs which makes it no longer true?

Answer 20

It amounts to a further misrepresentation

Question 21

Contract

What is one of the exceptional cases where damages will be awarded for loss of enjoyment and mental distress?

Answer 21

Where the purpose of the contract is enjoyment, e.g. a holiday

Question 22

Disputes

What does High Court Chancery Division deal with?

Answer 22

Disputes relating to:

1. Business
2. Equity
3. Trusts
4. Some land/property

Question 23

Disputes

What two things are not needed in the Particulars?

Answer 23

1. Statement of the limitation period, or
2. Statement of the court’s jurisdiction

Question 24

Disputes

How soon can a claimant can file an application for summary judgment?

Answer 24

As soon as defendant acknowledges service of the Particulars of Claim

Question 25

Disputes

What should be done on the claim form if an interim payment is made in a specified sum (debt) claim?

Answer 25

The amount paid should be subtracted from the debt amount on the claim form

Question 26

Disputes

Where experts attend their meeting, what three things will they aim to do?

Answer 26

1. Identify issues between them
2. Try to agree where possible, and
3. File a joint statement

Question 27

Disputes

What is the appropriate step if a witness cannot be located where (1) they have already given a statement, and (2) where they have not already given a statement?

Answer 27

1. Serving a summons at their last known address if statement already given
2. Seek permission to serve a witness summary, briefly summarising the evidence would give if called if statement not already given

Question 28

Legal Services

When dealing with indirect discrimination, and its justification, what should you check the answer choice contains?

Answer 28

Both parts of the justification: proportionate means and legitimate aim

Question 29

Legal Services

What is the first port of call where a solicitor attempts to report a suspicion to the MLRO and the MLRO is away?

Answer 29

Before making the SAR themselves, they should check if there is a deputy for the MLRO’s period of absence.

Only if not, then they must make the report themselves.

Question 30

Legal Services

For a freeland solicitor to provide a client with legal advice without being authorised as a sole practioner firm, in addition to three years PQE, adequate and appropriate insurance, and not holding client money, what must they also do?

Answer 30

Notify the SRA they are acting as a freelance solicitor

Question 31

Legal Services

When a solicitor reports suspicion of money laundering to MLRO, this is the end of their obligation. What should this not be confused with?

Answer 31

The continuing obligation to make a report to the SRA if the COLP doesn’t appear like they will, and suspicions persist.

Question 32

Legal System

For a precedent in a higher court to bind a lower court, do the facts have to mirror the previous case exactly?

Answer 32

No, the facts must just be materially the same

Question 33

Tax

Although capital gains form part of a company’s trade profits, what can capital losses be used to offset only?

Answer 33

Capital gains, not other trade profits

Question 34

Tax

Can a company carry capital losses back?

Answer 34

No

Question 35

Where a capital gain is not taxable, what is also true?

Answer 35

A loss on it is not deductible

Question 36

Tort

What is the exception to pure economic loss not generally being recoverable?

Answer 36

Where the loss was caused by a negligent misstatement where the defendant knew the:

1. Purpose of the statement, and
2. Person to whom it was made

Question 37

Tort

Why is damage to or replacement of property which did not belong to the claimant not recoverable?

Answer 37

Because it is pure economic loss

Question 38

Tort

Although a person is not generally liable for the torts of a carefully chosen independent contractor, when is an occupier of land liable for the nuisance created by an independent contractor?

Answer 38

If they adopt the nuisance or if the work for which the contractor was engaged carried a special danger of creating a nuisance

Question 39

Tort

In an employer’s liability situation where equipment causes harm to an employee, what must be established before fault can be attributed to the employer?

Answer 39

Establishing fault of a third party, e.g. manufactuer or supplier, is a prerequisite to applying this fault to the employer

If no fault in the facts, there is none to attribute to the employer

Question 40

Tort

When considering basic negligence questions, what is the main and most basic consideration to give to the conduct breaching the duty?

Answer 40

If it caused a foreseeable risk of harm

If it didn’t, there is no negligence

Question 41

Tort

What should not be confused for giving rise to manufactuer liability?

Answer 41

The fact a supplier defendant has gone out of business does not make a manufacturer liable where the test is otherwise not satisfied

Question 42

Tort

What does the defence of illegality prevent a claimant from doing?

Answer 42

Recovering compensation for damage suffered as a result of their own illegal actions or where they are trying to claim for harm suffered as they are doing something illegal

Question 43

Tort

Why can a passenger, knowing a pilot is drunk, and encouraging him to fly, not recover?

Answer 43

Volenti non fit injuria

Question 44

Tort

In a nervous shock situation, what should we first consider, and why?

Answer 44

Consider whether the claimant has also suffered a physical injury.

If they have, any psychiatric harm also suffered is recoverable as a consequence of the physical injury.

The consideration of primary and secondary victims is only relevant where psychiatric harm is the only injury.

Question 45

Tort

When considering a retailer’s attempt to exclude liability for personal injury or death due to negligence in supplying a product, what will the correct answer depend on?

Answer 45

Whether it is the negligence of the retailer or the manufacturer at issue

Question 46

Tort

When considering a retailer’s attempt to exclude liability for personal injury or death due to negligence in supplying a product, what will the correct answer concern where it is (1) the retailer, and (2) the manufactuer?

Answer 46

Retailer: Such liability cannot be excluded.

Manufactuer: Retailer cannot excude implied statutory conditions, because the manufactuer’s negligence goes to the satisfactory quality of the product.