ACCA FINAL ASSESSMENT

Corporate and Business Law June 2011

Time allowed Reading and planning: 15 minutes Writing: 3 hours

All TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.

Kaplan Publishing/Kaplan Financial

Paper F4 (ENG)

PAPER F4 (ENG): CORPORATE AND BUSINESS LAW

Kaplan Financial Limited, 2010 The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties. Please consult your appropriate professional adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials. All rights reserved. No part of this examination may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without prior permission from Kaplan Publishing.

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F INA L A SSESSME N T QUES TIONS

ALL TEN questions are compulsory and MUST be attempted

QUESTION 1
Explain briefly: (a) (b) the doctrine of judicial precedent; and the circumstances when a precedent will not be binding. (5 marks) (5 marks) (Total: 10 marks)

QUESTION 2
Explain the remedies available for breach of contract. (10 marks)

QUESTION 3
(a) (b) What is a companys share capital? Explain the meaning of the following: (i) (ii) issued capital; paid up capital. (3 marks) (3 marks) (Total: 10 marks) (4 marks)

QUESTION 4
(a) (b) Distinguish between executory, executed and past consideration. (5 marks)

Explain the principle that performance of an existing duty is not sufficient to amount to consideration. (5 marks) (Total: 10 marks)

QUESTION 5
(a) (b) Explain the meaning of corporate governance and what it covers in relation to companies. (4 marks) Explain the meaning of a principlesbased approach to corporate governance and the advantages and disadvantages of such an approach as opposed to a rules-based approach. (6 marks) (Total: 10 marks)

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P AP E R F 4 ( EN G ): COR PORA TE AND BUSINESS LAW

QUESTION 6
(a) (b) Describe the circumstances in which a partnership may be dissolved. (7 marks) Briefly summarise the differences between a partnership governed by the Partnership Act 1890 and a Limited Liability Partnership (LLP). (3 marks) (Total: 10 marks)

QUESTION 7
(a) Explain what is meant by the following in company law: (i) (ii) (b) a promoter; a pre-incorporation contract. (3 marks) (3 marks) (4 marks) (Total: 10 marks)

What is the liability of a promoter on a pre-incorporation contract?

QUESTION 8
Info Ltd is a small company that specialises in selling computer hardware and software to accountancy firms. It advertised in a specialist accounting journal as follows: Clearance sale: Limited number of Super 6686 Computers for only 1,000 each! Will be sold to the first 20 customers to send an order and cheque for the full amount. Alan, an accountant, reads the advertisement on Wednesday, the day of publication of the journal. He immediately posts an order including his cheque to Info Ltd. By 8 am on Thursday morning he has changed his mind and he sends a fax to Info Ltd cancelling his order and requesting the return of his cheque. His posted letter arrives one hour later. Info Ltd subsequently cashes Alan's cheque, claiming that it has a binding contract with him, and refuses to return the money. Required: Advise Info Ltd whether it has contractual rights against Alan. (10 marks)

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FINAL ASSESSMENT QUESTIONS

QUESTION 9
Raymond is a director of Atkinson Ltd, a soft drink company. In January, Raymond paid a visit to Charles who is the chief executive of Carbon Cans Ltd, a company that manufactures drinks cans and bottles aimed at the beer market. During a round of golf, Charles informs Raymond that he has patented an ingenious design for a beer can which can keep beer at the correct temperature. Charles asks Raymond whether his company would be interested in licensing the product. In March, the board of directors of Atkinson decides that the company will enter into the beer market. In April, Raymond resigns as director and assumes the position of director of a rival company, and one of his first actions as director is to adopt the Carbon Cans license as proposed by Charles. Raymonds new company is making a roaring trade selling quality beer which remains fresh and cooler far longer than its competitors. Required: Explain the nature of the duties that a director owes to his company and whether Raymond is liable to account to Atkinson for the profit made. (10 marks)

QUESTION 10
Samson is a partner in a firm of solicitors and is representing his client Timothy in the purchase of an apartment for 250,000. Timothy is financing this purchase with a 180,000 mortgage loan from a building society and the remaining sum from his own savings. However, he only has a total of 20,000 in his savings account and does not own any other assets such as shares. On a recent visit to see Samson, Timothy seemed very anxious and was very concerned that he had absolutely no money left to cover the outstanding balance. Two days later Timothy returned to Samson's office with 50,000 in cash and told Samson, 'this should settle it'. Samson is concerned about how quickly Timothy has been able to obtain the money to cover the transaction and he is uncertain about how to proceed. Required: Advise Samson what he must and must not do to avoid liability for Money Laundering under the Proceeds of Crime Act 2002. (10 marks)

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P AP E R F 4 ( EN G ): COR PORA TE AND BUSINESS LAW

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