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Corporate and Business Law

Paper F4(ENG)
Progress Tests
For exams from 1 September 2015 31 August 2016

F4(ENG): PROGRESS TEST 1

Progress Test 1
1

The Queen's Bench Division of the High Court deals with which of the following types of
case?
A
B
C
D

True
False

(2 marks)

Private individuals
Companies
Public authorities
Charitable organisations

(2 marks)

Transfer of shares
Bill of exchange
Consumer credit
Conveyance of land

(2 marks)

The postal rule states that acceptance made by post is effective when the letter reaches the
offeror.
A
B

(2 marks)

Which of the following contracts must be made by deed?


A
B
C
D

High Court
County Court
Crown Court
Privy Council

The Human Rights Act 1998 binds which of the following and means they should protect an
individual's Convention rights?
A
B
C
D

(2 marks)

The Supreme Court is not bound by any other court.


A
B

Fast
Small claims
Multi
Tribunal

District judges are found at which type of court?


A
B
C
D

(2 marks)

Civil cases are allocated to one of three tracks when being dealt with by the court system. A
case with a value of less than 10,000 will be allocated to which track?
A
B
C
D

Trusts
Bankruptcy
Company matters
Contract and tort

True
False

(2 marks)

Can 1 paid for a car worth 100,000 be valid as consideration in contract?


A
B

Yes
No

(2 marks)
3

F4(ENG): PROGRESS TEST 1

Jack owes Joe 100 and repayment is due on 30th June 20X1. Jack offers to repay 80 on
1st April 20X1 if Joe agrees to write off the rest of the debt.
Joe agrees to this but on 30th June 20X1 he requests that Jack pays him the balance. Does
Jack have to make the payment?
A
B

10

Yes
No

(2 marks)

Jodie signed a contract but did not read any of the small print and the other party knows she
did not read the small print. Is Jodie bound by the terms of the contract?
A
B

Yes
No

(2 marks)
END OF PROGRESS TEST

F4(ENG): PROGRESS TEST 1

Progress Test 1 solutions


Multiple choice answers
1

Cases related to trusts, bankruptcy and company matters are dealt with by the
Chancery Division.

Claims with a value of less than 10,000 are allocated to the small claims track.

District judges are mainly found in County Courts but they may also hear cases at a
Magistrate's Court.

The Supreme Court is bound by decisions of the European Court of Justice.

The Human Rights Act 1998 is only binding on public authorities.

The other contracts must be made in writing and signed they do not have to be
made by deed.

Under the postal rule, acceptance is effective once the letter is posted it does not
matter if it is delayed or does not reach the offeror at all.

The courts are not there to prevent a bad bargain. Providing the consideration has
some value, it is sufficient as consideration.

Joe received something that he was not already entitled to (early repayment) when he
wrote part of the debt off, so Jack gave consideration for the agreement to partially
write off the debt.

10

By signing a contract, a person is deemed to be bound by all the terms contained


within it.

F4(ENG): PROGRESS TEST 1

F4(ENG): PROGRESS TEST 2

Progress Test 2
1

Under the Unfair Contract Terms Act 1977 (UCTA) certain exemption clauses are void or
subject to a reasonableness test depending on whether they relate to consumer or
non-consumer transactions.
Exemption clauses relating to which of the following terms would be void in a consumer
contract under UCTA 1977? (You may select more than one option.)
A
B
C
D

Specific performance
Action for the price
Injunction
Recission

(2 marks)

In a negligence case, where res ipsa loquitur is established, it is up to the defendant to


prove that they were not negligent.
A
B

(2 marks)

Damages are a common law remedy for breach of contract. Which of the following is
another common law remedy?
A
B
C
D

Title
Description
Quality
Sample

True
False

(2 marks)

To whom do company auditors owe a duty of care in respect of financial statements that
they have audited?
A

The company's debentureholders

Individual shareholders who decide to buy more shares as a result of the financial
statements

New shareholders who invested in the company as a result of the financial statements

The shareholders as a whole

(2 marks)

An act which has already been performed before an act or promise is given in return is not
usually sufficient as consideration. But it will be where:
A

A person performs a service at another's request and is later promised payment.

A person spends money on his own initiative and another party later agrees in writing
to repay it.

A debt has become statute-barred but the debtor verbally acknowledges its existence.

A promissory note is given in settlement of an existing debt.

(2 marks)

An employee has preferential rights as a creditor for outstanding payments, such as salary
and redundancy pay, in the event of their employer being liquidated.
A
B

True
False

(2 marks)
7

F4(ENG): PROGRESS TEST 2

An employee owes a number of common law duties to their employer. Which of the
following are such duties?
(i)
(ii)
(iii)
(iv)

Reasonable competence
Obedience to all instructions
Account for all money and property received during the course of employment
Reasonable care and skill

A
B
C
D

(i) and (ii) only


(ii) and (iv) only
(iii) and (iv) only
(i), (iii) and (iv) only

(2 marks)

Sian was employed by Ryan for five years when her employment contract was amended.
She did not verbally agree to the change, nor did she sign a new contract or a statement of
the new terms and conditions. However she did work under the new conditions.
Has Sian consented to the variation in her contract?
A
B

(2 marks)

How much notice is an employee entitled to if they have been employed for 15 months?
A
B
C
D

10

Yes
No
One week
Two weeks
Fifteen days
Four weeks

(2 marks)

How many years continuous service must an employee have before they are entitled to
statutory redundancy pay?
A
B
C
D

One
Two
Three
Four

(2 marks)
END OF PROGRESS TEST

F4(ENG): PROGRESS TEST 2

Progress Test 2 solutions


Multiple choice answers
1

A, B, C, D
Under UCTA, exemption clauses relating to title, description, quality and sample are void in
consumer transactions.
In a non-consumer transaction all except for title would be subject to a reasonableness test.

B
The other remedies are equitable remedies.

A
Where res ipsa loquitur is established the burden of proof is reversed and the defendant
must prove that they were not negligent.

D
In general no duty is owed to anyone that invests in a company as a result of the audited
financial statements.

A
A request for service carries an implied duty to pay. The amount can be fixed later.

A
An employee has rights as a preferential creditor up to a statutory limit.

D
Employees do not have to follow instructions that are unlawful or that would expose them to
personal danger not inherent in the work.

A
Employees can indicate consent to a change in their contract by simply working under the
new conditions.

A
Employees that have been employed between one month and two years are entitled to one
week's notice.

10

B
Employees must have a minimum of two years continuous service before they become
entitled to statutory redundancy pay.

F4(ENG): PROGRESS TEST 2

10

F4(ENG): PROGRESS TEST 3

Progress Test 3
1

Sophie acted as agent for Greg for a number of years in relation to Greg's commercial
activities with Alice.
On 1st April 20X1 Greg revokes Sophie's authority but does not notify Alice of this.
On 30th May 20X1 Sophie enters into a contract with Alice who believes that Greg is the
principal.
Is Greg liable on the contract?
A
B

Yes
No

(2 marks)

In the event of a partnership being terminated, its assets are realised and then distributed in
a particular order.
What is the first use the realised assets are put to?
A
B
C
D

(2 marks)

Which of the following documents are NOT required to be submitted when applying to
register a company?
A
B
C
D

Repaying any partners' loans


Repaying the partners' capital contribution
Paying partners any past profits they have not been paid
Repaying any external debts

Memorandum of association
Articles of association
Statement of proposed officers
Statement of compliance

(2 marks)

In relation to a company's articles of association, which of the following is incorrect?


A

The articles of association set down the internal regulations of a company.

Promoters may or may not submit their own form of articles when submitting the
forms necessary to form a company limited by shares.

The articles of association form a contract between the members and the company
and the members amongst themselves.

Any article of association may be changed by special resolution, subject to the right of
the holders of 15% of the company's shares or debentures to object to the court.
(2 marks)

A public company limited by shares must have:


A
B
C
D

At least two directors, and one shareholder


At least one director, one company secretary and two shareholders
At least two directors, one company secretary and two shareholders
At least two directors, one company secretary and one shareholder

11

(2 marks)

F4(ENG): PROGRESS TEST 3

If a contract is entered into by promoters before the incorporation of a company, which of


the following is incorrect?
A

The company may ratify the contract as soon as it receives its certificate of
incorporation.

Subject to agreement to the contrary, the promoters may be held personally liable on
the contract.

The company cannot enforce the contract prior to its incorporation.

The company cannot be held liable even if it has adopted the contract after receiving
its certificate of incorporation.
(2 marks)

If a company's actions are restricted by its objects, which of the following is correct?
A

Ultra vires contracts with third parties are invalid.

Ultra vires contracts with third parties are valid.

Ultra vires contracts with third parties are valid only if the third party enquired into the
existence of any limitations.

Ultra vires contracts with third parties are valid even in the event of lack of good faith
being proved against the third party.
(2 marks)

Tom has transferred his business to Tom Ltd, a company limited by shares. Which of the
following statements is correct?
A

Tom Ltd is fully liable for all debts and liabilities of the business incurred after the date
of transfer.

Tom is fully liable for all debts and liabilities of the business incurred after the date of
transfer.

Tom and Tom Ltd are jointly liable for all debts and liabilities of the business incurred
after the date of transfer.

Tom Ltd and its shareholders are fully liable for all debts and liabilities incurred after
the date of transfer.
(2 marks)

A public limited company cannot commence business or borrow money until the nominal
value of the company's allotted share capital is not less than:
A
B
C
D

10

12,500
25,000
40,000
50,000

(2 marks)

Within what period of time after the year end must a company file its accounts with the
Registrar?
A
B
C
D

Three months for a public company and six months for a private company
Nine months for a public company and seven months for a private company
Six months for a public company and nine months for a private company
Ten months for a public company and twelve months for a private company (2 marks)
END OF PROGRESS TEST
12

F4(ENG): PROGRESS TEST 3

Progress Test 3 solutions


Multiple choice answers
1

A
Revoking an agent's authority is not enough. Principals must also notify any third parties that
they deal with of the change in circumstances.

D
The first use any realised assets are put to is repaying any external debts. Any balance
remaining is then used to repay any partners' loans, then their capital contributions and
finally any funds remaining are allocated between the partners in the profit sharing ratio.

B
If articles of association are not submitted then the company will be registered with model
articles relevant to the type of company being formed.

D
The 15% applies to minority protection in cases of variation of class rights, not of all the
articles.

D
A public company must have at least two directors and a secretary. It must also have at
least one member.

A
A company cannot enforce a contract before it comes into existence (Option C), and cannot
ratify a pre-incorporation contract (Option A). The promoters may be liable (Option B):
s 51(1).

B
Third parties to such contracts are protected by ss 39 and 40.

A
A company has a separate legal identity: Salomon v Salomon Ltd.

D
The nominal value of allotted share capital must be 50,000.

10

C
A public company has six months to file accounts, a private company has nine.

13

F4(ENG): PROGRESS TEST 3

14

F4(ENG): PROGRESS TEST 4

Progress Test 4
1

Is a company liable on a contract signed by the entire board of directors where that contract
is expressly prohibited by the articles of association?
A
B

Fixed
Floating
Either fixed or floating
Neither fixed nor floating as debts may not be secured on inventory

(2 marks)

A motor vehicle that has been independently valued

An undertaking to perform services for the company

Shares in a private company

A business property which will be transferred to the company six years following the
allotment
(2 marks)

At a public company's first AGM, how many of the directors are required to retire according
to the Companies Act 2006?
Half
A third
A quarter
All

(2 marks)

Except for single member companies, and unless otherwise changed by the articles, how
many people constitute a quorum for company meetings?
A
B
C
D

(2 marks)

Assuming the allotment is not part of a takeover bid, which of the following is permitted
consideration for the allotment of shares by a public company?

A
B
C
D
6

True
False

Which type of charge is required where the debentureholder wishes to take security over
inventory?
A
B
C
D

(2 marks)

Directors of private companies must always seek authority from the members whenever
they allot new shares.
A
B

Yes
No

Two
Three
Four
Five

(2 marks)

Which of the following may apply to put a company into administration without a court order?
A
B
C
D

An individual member
A fixed chargeholder
A floating chargeholder
An unsecured creditor

(2 marks)
15

F4(ENG): PROGRESS TEST 4

Not expecting to make a profit or avoid a loss is a valid defence to a charge of insider
dealing.
A
B

(2 marks)

With which of the following offences would a person be charged if they interfered with the
usual process of share prices moving up and down in accordance with supply and demand?
A
B
C
D

10

True
False

Insider dealing
Wrongful trading
Market abuse
Money laundering

(2 marks)

Fraudulent trading is classified as:


A
B
C
D

A criminal offence only


A criminal and a civil offence
A civil offence only
A tort

(2 marks)

END OF PROGRESS TEST

16

F4(ENG): PROGRESS TEST 4

Progress Test 4 solutions


Multiple choice answers
1

A
Third parties are protected where they enter into a contract in good faith even if that contract
is ultra vires for the company.
However, members are permitted to take action against the directors for acting in this way.

B
Directors of private companies with one class of share do not need to seek authority from
the members. They may allot shares providing they are not restricted from doing so by the
articles.

B
A fixed charge cannot be used as the specific assets cannot be identified when the charge
is registered.

A
Public companies can accept non-cash consideration for an allotment of shares providing it
has been independently valued, is not an undertaking to perform services and the
consideration is provided to the company within five years of the allotment.

D
At a public company's first AGM, all the directors are required to retire. However, they can
offer themselves for re-election.

A
Two people, whether members or their proxies, constitute a quorum.

C
Only the company, its directors and floating chargeholders can apply to put the company
into administration without a court order.

A
If a defendant can prove they did not expect to make a profit or avoid a loss then they have
a defence against a charge of insider dealing.

C
Market distortion is one of a number of offences which amount to market abuse.

10

B
Fraudulent trading is classified as a criminal offence under s993 of the Companies Act 2006
and as a civil offence under s213 of the Insolvency Act 1986.

17

F4(ENG): PROGRESS TEST 4

18

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