Topic 1: Intro to Commercial Law (B)

Question 1

What type of commercial risks exist? From what perspectives?

Answer 1

Entrepreneur/Business, Counterparty (i.e. shareholder or stakeholder), and Lawyer

Question 2

Does the UK address most of the risks in commercial law?

Answer 2

UK commercial law is pro-business (lots of business vehicles, financing options, security, etc.)
(However, is balanced with laws)

Question 3

What was the old commercial law called?

Answer 3

Lex Mercatoria

Question 4

What remains of Lex Mercatoria today?

Answer 4

Principles of the law, procedural rules, business organization variants, etc.

Question 5

What are the main business vehicles available?

Answer 5

Sole trading, franchise, european SE, building society, cooperative society, partnerships, companies

Question 6

What are the three forms of partnerships?

Answer 6

Ordinary, limited, and limited liability

Question 7

What is an ‘Ordinary Partnership’?

Answer 7

1) “Easiest” method of partnership
2) Agreement between two or more parties to make profit
3) No need to MAKE profit, BUT must be a view to want to make profits
4) Money company makes is not taxed, only employee income

Question 8

What is a ‘Limited Partnership’?

Answer 8

1) s4 LP Act 1907
2) ‘General partner’ in charge of all debts
3) ‘Limited partner’ in charge of bringing funds
4) Each partner can be one or more persons
5) Both parties are exposed

Question 9

What is a ‘Limited Liability Partnership’?

Answer 9

1) LLP Act 2000
2) Hybrid between company and partnership
3) Generally for Law firms and doctors
4) Every member of LLP is an agent of the LLP
5) Clyde & Co LLP v Bates said employees may be partners

Question 10

Difference between Limited and Unlimited companies?

Answer 10

Limited means limited by shares or guarantee

Question 11

Difference between Separate Legal Persons (SLP) and Limited Liability (LL)?

Answer 11

1) LL lies on shareholders, SLP put liability on shareholders
2) LL & SLP lower risk significantly

Question 12

What is the history of the LLC?

Answer 12

1) Insolvency used to be frowned upon
2) Only unlimited companies existed
3) Traders shouldered the risk of insolvency
4) South Sea Bubble Act 1720
5) Law was NOT pro-business at this time

Question 13

How did UK law move to accept LLC?

Answer 13

1) Repealed South Bubble Act in 1825
2) Garrard v Hady recognized joint stock companies
3) Limited Liability Act 1855
4) Companies Act 1862 (Eventually Companies Act 2006)
5) Salomon v Salomon

Question 14

Difference between LTD and LLC?

Answer 14

1) LTD pays taxes, LLC is exempt
2) Same protections
3) LLC is limited in terms of ability for creditors to go after personal assets
4) LTD has owners purchasing stock, LLC has no stock for owners to purchase